VIG vs. MDY: What’s The Difference?

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between VIG and MDY? And which fund is better?

The expense ratio of VIG is 0.17 percentage points lower than MDY’s (0.06% vs. 0.23%). VIG also has a lower exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than MDY over the past ten years.

In this article, we’ll compare VIG vs. MDY. We’ll look at fund composition and performance, as well as at their holdings and annual returns. Moreover, I’ll also discuss VIG’s and MDY’s industry exposure, risk metrics, and portfolio growth and examine how these affect their overall returns.

Summary

VIG MDY
Name Vanguard Dividend Appreciation Index Fund ETF Shares SPDR S&P MIDCAP 400 ETF Trust
Category Large Blend Mid-Cap Blend
Issuer Vanguard SPDR State Street Global Advisors
AUM 71.92B 21.31B
Avg. Return 13.35% 13.29%
Div. Yield 1.56% 0.94%
Expense Ratio 0.06% 0.23%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.

The SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.

VIG’s dividend yield is 0.62% higher than that of MDY (1.56% vs. 0.94%). Also, VIG yielded on average 0.06% more per year over the past decade (13.35% vs. 13.29%). The expense ratio of VIG is 0.17 percentage points lower than MDY’s (0.06% vs. 0.23%).

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Fund Composition

Industry Exposure

VIG vs. MDY - Industry Exposure

VIG MDY
Technology 14.93% 14.74%
Industrials 17.23% 17.88%
Energy 0.0% 2.52%
Communication Services 2.86% 1.63%
Utilities 2.81% 2.84%
Healthcare 15.52% 11.17%
Consumer Defensive 15.32% 4.2%
Real Estate 0.0% 9.66%
Financial Services 17.18% 15.2%
Consumer Cyclical 10.47% 14.89%
Basic Materials 3.67% 5.27%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.

VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.

The SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.

MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.

VIG is 0.65% less exposed to the Industrials sector than MDY (17.23% vs 17.88%). VIG’s exposure to Financial Services and Healthcare stocks is 1.98% higher and 4.35% higher respectively (17.18% vs. 15.2% and 15.52% vs. 11.17%). In total, Energy, Utilities, and Communication Services also make up 1.32% less of the fund’s holdings compared to MDY (5.67% vs. 6.99%).

Holdings

VIG - Holdings

VIG Holdings Weight
Microsoft Corp 4.19%
JPMorgan Chase & Co 3.8%
Johnson & Johnson 3.67%
Walmart Inc 3.38%
Visa Inc Class A 3.22%
UnitedHealth Group Inc 3.22%
The Home Depot Inc 2.91%
Procter & Gamble Co 2.82%
Comcast Corp Class A 2.21%
Coca-Cola Co 1.98%

VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.

UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.

MDY - Holdings

MDY Holdings Weight
Bio-Techne Corp 0.75%
Molina Healthcare Inc 0.63%
Cognex Corp 0.63%
Fair Isaac Corp 0.62%
XPO Logistics Inc 0.61%
SolarEdge Technologies Inc 0.61%
Signature Bank 0.6%
Graco Inc 0.55%
Camden Property Trust 0.55%
FactSet Research Systems Inc 0.54%

MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.

SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.

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Risk Analysis

VIG MDY
Mean Return 1.09 1.08
R-squared 92.2 86.66
Std. Deviation 12.25 16.83
Alpha 0.12 -4.1
Beta 0.86 1.15
Sharpe Ratio 1.01 0.73
Treynor Ratio 14.33 9.97

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a R-squared of 92.2 with a Standard Deviation of 12.25 and a Mean Return of 1.09. Its Sharpe Ratio is 1.01 while VIG’s Alpha is 0.12. Furthermore, the fund has a Treynor Ratio of 14.33 and a Beta of 0.86.

The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Standard Deviation of 16.83 with a Sharpe Ratio of 0.73 and a Mean Return of 1.08. Its Alpha is -4.1 while MDY’s Beta is 1.15. Furthermore, the fund has a Treynor Ratio of 9.97 and a R-squared of 86.66.

VIG’s Mean Return is 0.01 points higher than that of MDY and its R-squared is 5.54 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than MDY. The Alpha and Beta of VIG are 4.22 points higher and 0.29 points lower than MDY’s Alpha and Beta.

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Performance

Annual Returns

VIG vs. MDY - Annual Returns

Year VIG MDY
2020 15.46% 13.51%
2019 29.71% 25.86%
2018 -2.02% -11.28%
2017 22.22% 15.89%
2016 11.84% 20.33%
2015 -1.95% -2.4%
2014 10.06% 9.42%
2013 28.99% 33.08%
2012 11.61% 17.58%
2011 6.21% -1.99%
2010 14.67% 26.17%

VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% respectively.

The year 2013 was the strongest year for MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% respectively.

Portfolio Growth

VIG vs. MDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VIG $10,000 $37,951 13.35%
MDY $10,000 $36,524 13.29%

A $10,000 investment in VIG would have resulted in a final balance of $37,951. This is a profit of $27,951 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

With a $10,000 investment in MDY, the end total would have been $36,524. This equates to a $26,524 profit over 11 years and a compound annual growth rate (CAGR) of 13.29%.

VIG’s CAGR is 0.06 percentage points higher than that of MDY and as a result, would have yielded $1,427 more on a $10,000 investment. Thus, VIG outperformed MDY by 0.06% annually.


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