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ETFs are becoming ubiquitous as their appeal drives them to increasing use in building portfolios. We are working through the process of selecting the best ETFs from a returns perspective to build a plan that has a reasonable number of funds and yet can deliver strong returns.

So far we have covered large cap stocks -- blend, growth and value.

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In this article, we move on to mid cap blend ETFs with the goal of providing the same ranking.

We will follow the same process -- rank and determine a cutoff based on trading volume for liquidity and low trading friction, then rank them based on their returns and assign a score.

We start with an extensive list of large cap value ETFs:

Symbol

Name

MDY

SPDR S&P MidCap 400

IJH

iShares S&P MidCap 400 Index

IWR

iShares Russell Midcap Index

VO

Vanguard Mid-Cap ETF

VXF

Vanguard Extended Market Index

FNX

First Trust Mid Cap Core Alpha

JKG

iShares Morningstar Mid Core I

RWK

RevenueShares Mid Cap

EMM

SPDR Dow Jones Mid Cap

PJG

PowerShares Dynamic Mid Cap

CZA

Guggenheim Mid-Cap Core

IVOO

Vanguard S&P Mid-Cap 400 Index

EWRM

Rydex Russell MidCap Equal Wei

SCHM

Schwab U.S. Mid-Cap ETF

We reviewed daily trading volume data and applied a cutoff below 200,000. Note that this is a lower threshold than the large cap blend but we will trade volume for having enough ETFs to make a reasonable comparison. This left us four ETFs with sufficient volume to be considered further.

Ticker

Description

5 Yr AR%

3yr AR%

1yr AR%

MDY

SPDR S&P MidCap 400

5.09%

6.20%

36.87%

IJH

iShares S&P MidCap 400 Index

4.42%

5.66%

36.70%

VO

Vanguard Mid-Cap ETF

3.60%

3.05%

36.00%

IWR

iShares Russell Midcap Index

3.27%

2.89%

34.69%

All of the mid cap blends show good performance but MDY and IJH are top of the heap and also have the highest trading volume and so they are the logical pick for inclusion in the portfolio. We will also include VO as a backup if the other two exhibit some undesirable properties in deeper examination.

Ticker

Property

2004

2005

2006

2007

2008

2009

2010

2011

MDY

DrawDown(%)

10.49

7.99

12.52

11.07

53.07

27.49

17.58

2.54

Return(%)

15.89

12.53

9.54

7.23

(36.44)

37.03

26.48

4.21

IJH

DrawDown(%)

10.93

8.33

12.89

11.39

53.41

27.25

17.45

2.58

Return(%)

15.00

11.55

8.63

5.95

(36.59)

35.78

26.41

4.07

VO

DrawDown(%)

10.06

7.96

11.58

12.34

55.70

27.43

16.76

2.24

Return(%)

6.52

13.79

13.54

5.14

(42.85)

40.13

25.82

4.67

We can see that there are no anomalies in the detailed return or drawdown information so MDY and IJH become the two midcap blends that will be added to the portfolio.

Disclosure: MyPlanIQ does not have any business relationship with the company or companies providing the ETFs mentioned in this article. We have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: U.S. Mid Cap Blend Rankings Boost ETF Portfolios