State Street SPDR S&P MIDCAP 400 ETF Trust

MDY

Market cap $25.2B

If you're interested in broad exposure to the Mid Cap Blend segment of the US equity market, look no further than the State Street SPDR S&P MIDCAP 400 ETF Trust (MDY), a passively managed exchange traded fund launched on May 4, 1995.

As a group, mid-cap stocks boast a stronger long-term track record of returns than their large-cap counterparts. This ETF is not only better balanced in terms of sector allocation but also offers a distinctly different sector weighting that might complement most large-cap index fund holdings.

The State Street SPDR S&P MidCap 400 ETF Trust offers attractive mid-cap exposure, especially to industrials and regional financials poised to benefit from rate cuts. MDY's sector mix is well positioned for a normalized economic regime, with regional banks and real estate likely to gain from a steepening yield curve and rising housing indices. Valuations are compelling, with MDY trading below 17x PE versus the broader market's 30x, and regional banks trading below long-term averages, offering upside potential.

The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) tells a story of increasing concentration.

Designed to provide broad exposure to the Mid Cap Blend segment of the US equity market, the SPDR S&P MidCap 400 ETF (MDY) is a passively managed exchange traded fund launched on May 4, 1995.

Mid-cap momentum is building up as investors seek a balance between shaky large caps and volatile small caps. These ETFs -- FNX, MDYV, MDY, IJH & IWR -- are climbing.

On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research, Todd Rosenbluth, discussed the Invesco S&P MidCap Momentum ETF (XMMO) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF.

SPDR MidCap 400 ETF Trust (MDY) offers strong historical returns, outperforming the S&P 500 since 1991 but with higher volatility and risk. MDY's structural soundness is solid, with high liquidity and a low expense ratio, but its risk-adjusted returns and yield are underwhelming. Despite decent up-market participation, MDY's elevated beta and poor downside protection make it unsuitable for most investment styles.

I'm downgrading SPDR S&P MIDCAP 400 ETF Trust from "Buy" to "Hold" due to weak technicals despite attractive long-term valuation. MDY has underperformed major indices, returning just 2.6% since October 2024 and lagging the S&P 500 by 12 percentage points. Short-term risks include negative momentum, a break below key moving averages, and bearish technical signals, suggesting further downside is likely.

If you're interested in broad exposure to the Mid Cap Blend segment of the US equity market, look no further than the SPDR S&P MidCap 400 ETF (MDY), a passively managed exchange traded fund launched on May 4, 1995.