VUG vs. MDY: What’s The Difference?

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

The expense ratio of VUG is 0.19 percentage points lower than MDY’s (0.04% vs. 0.23%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than MDY over the past ten years.

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

Summary

VUG MDY
Name Vanguard Growth Index Fund ETF Shares SPDR S&P MIDCAP 400 ETF Trust
Category Large Growth Mid-Cap Blend
Issuer Vanguard SPDR State Street Global Advisors
AUM 165.53B 21.31B
Avg. Return 17.58% 13.29%
Div. Yield 0.57% 0.94%
Expense Ratio 0.04% 0.23%

The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% with an expense ratio of 0.04%.

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%.

VUG’s dividend yield is 0.37% lower than that of MDY (0.57% vs. 0.94%). Also, VUG yielded on average 4.29% more per year over the past decade (17.58% vs. 13.29%). The expense ratio of VUG is 0.19 percentage points lower than MDY’s (0.04% vs. 0.23%).

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Fund Composition

Industry Exposure

VUG vs. MDY - Industry Exposure

VUG MDY
Technology 39.05% 14.74%
Industrials 5.13% 17.88%
Energy 0.32% 2.52%
Communication Services 16.49% 1.63%
Utilities 0.0% 2.84%
Healthcare 8.09% 11.17%
Consumer Defensive 2.41% 4.2%
Real Estate 2.46% 9.66%
Financial Services 6.75% 15.2%
Consumer Cyclical 17.78% 14.89%
Basic Materials 1.52% 5.27%

The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.

VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.

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%.

VUG is 24.31% more exposed to the Technology sector than MDY (39.05% vs 14.74%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 2.89% higher and 14.86% higher respectively (17.78% vs. 14.89% and 16.49% vs. 1.63%). In total, Energy, Basic Materials, and Consumer Defensive also make up 7.74% less of the fund’s holdings compared to MDY (4.25% vs. 11.99%).

Holdings

VUG - Holdings

VUG Holdings Weight
Apple Inc 10.13%
Microsoft Corp 9.52%
Amazon.com Inc 6.88%
Facebook Inc Class A 3.89%
Alphabet Inc Class A 3.43%
Alphabet Inc Class C 3.22%
Tesla Inc 2.44%
NVIDIA Corp 2.21%
Visa Inc Class A 1.78%
PayPal Holdings Inc 1.6%

VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.

Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.

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

VUG MDY
Mean Return 1.44 1.08
R-squared 92.48 86.66
Std. Deviation 14.76 16.83
Alpha 1.81 -4.1
Beta 1.04 1.15
Sharpe Ratio 1.13 0.73
Treynor Ratio 16.13 9.97

The Vanguard Growth Index Fund ETF Shares (VUG) has a Mean Return of 1.44 with a Treynor Ratio of 16.13 and a Sharpe Ratio of 1.13. Its R-squared is 92.48 while VUG’s Alpha is 1.81. Furthermore, the fund has a Beta of 1.04 and a Standard Deviation of 14.76.

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

VUG’s Mean Return is 0.36 points higher than that of MDY and its R-squared is 5.82 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than MDY. The Alpha and Beta of VUG are 5.91 points higher and 0.11 points lower than MDY’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. MDY - Annual Returns

Year VUG MDY
2020 40.16% 13.51%
2019 37.26% 25.86%
2018 -3.32% -11.28%
2017 27.8% 15.89%
2016 6.13% 20.33%
2015 3.32% -2.4%
2014 13.62% 9.42%
2013 32.38% 33.08%
2012 17.03% 17.58%
2011 1.87% -1.99%
2010 17.11% 26.17%

VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% 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

VUG vs. MDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VUG $10,000 $54,735 17.58%
MDY $10,000 $36,524 13.29%

A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.

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%.

VUG’s CAGR is 4.29 percentage points higher than that of MDY and as a result, would have yielded $18,211 more on a $10,000 investment. Thus, VUG outperformed MDY by 4.29% annually.


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