ETF Spotlight: Mid-Cap Stocks

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 |  Includes: DIM, IWS, VOE
by: Tom Lydon

Mid-cap stocks have fared well into 2012, outperforming large-caps. Exchange traded funds could be the ticket to gaining exposure to this asset class, for those investors that want diversified exposure that mitigates the risk.

Year to date through March 26, 2012, the S&P Mid-Cap 400 index is up 14%, modestly outpacing the 13% gain for the S&P 500; the 400's best-performing sectors are consumer discretionary and information technology. Sam Stovall, Chief Equity Strategist for S&P Capital IQ, believes that history suggests, but does not guarantee, that these stocks, as a group, have more room to run" Todd Rosenbluth, S&P Capital IQ ETF Analyst wrote in a recent report.

Investors may want to look for high-quality bundles of stocks, in an ETF form. The following ETFs were ranked by S&P Capital IQ :

  • iShares Russell Mid Cap Value Index (IWS) This ETF is up 12% this year; Financials, utilities and consumer discretionary are the top sectors represented. The 1.95% dividend yield and 0.25% expense ratio should be considered.
  • Vanguard Mid Cap Value Index (VOE) This ETF is also up 12% this year, and the same sectors are dominating the holdings: financials, utilities and consumer discretionary. A dividend yield of 2% and an expense ratio of 0.12% is attractive.
  • WisdomTree Mid Cap Dividend Fund (DIM) The same three sectors are represented once again, financials, utilities and consumer discretionary. A higher 2.28% dividend yield beats the others, but the 0.38% expense ratio is a factor.

Tisha Guerrero contributed to this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.