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Designed to provide broad exposure to the Mid Cap Blend segment of the US equity market, the Vanguard S&P Mid-Cap 400 ETF (IVOO) is a passively managed exchange traded fund launched on 09/09/2010.
The fund is sponsored by Vanguard. It has amassed assets over $1.56 billion, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.
Why Mid Cap Blend
Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. These types of companies, then, have a good balance of stability and growth potential.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.10%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.52%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 22.90% of the portfolio. Consumer Discretionary and Financials round out the top three.
Looking at individual holdings, Fair Isaac Corp. (FICO) accounts for about 0.76% of total assets, followed by Reliance Steel & Aluminum Co. (RS) and Axon Enterprise Inc. (AXON).
The top 10 holdings account for about 5.97% of total assets under management.
Performance and Risk
IVOO seeks to match the performance of the S&P MidCap 400 Index before fees and expenses. The S&P MidCap 400 Index measures the performance of the mid-cap segment of the U.S. equity universe. The Index is a capitalization-weighted index composed of 400 domestic common stocks.
The ETF return is roughly 5.99% so far this year and was up about 2.94% in the last one year (as of 06/09/2023). In the past 52-week period, it has traded between $74.30 and $91.88.
The ETF has a beta of 1.13 and standard deviation of 21.78% for the trailing three-year period, making it a medium risk choice in the space. With about 402 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard S&P Mid-Cap 400 ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IVOO is a great option for investors seeking exposure to the Style Box - Mid Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.