Best And Worst Q2 2020: Mid Cap Value ETFs And Mutual Funds
Summary
- The Mid Cap Value style ranks sixth in Q2'20.
- Based on an aggregation of ratings of 13 ETFs and 144 mutual funds in the Mid Cap Value style.
- ONEY is our top-rated Mid Cap Value style ETF and FIDFX is our top-rated Mid Cap Value style mutual fund.
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The Mid Cap Value style ranks sixth out of the 12 fund styles as detailed in our Q2'20 Style Ratings for ETFs and Mutual Funds report. Last quarter, the Mid Cap Value style ranked eighth. It gets our Neutral rating, which is based on an aggregation of ratings of 13 ETFs and 144 mutual funds in the Mid Cap Value style. See a recap of our Q1'20 Style Ratings here.
Figure 1 ranks from best to worst the seven Mid Cap Value ETFs that meet our liquidity standards and Figure 2 shows the five best and worst rated Mid Cap Value mutual funds. Not all Mid Cap Value style ETFs and mutual funds are created the same. The number of holdings varies widely (from 21 to 675). This variation creates drastically different investment implications and, therefore, ratings.
Investors seeking exposure to the Mid Cap Value style should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2.
Figure 1: ETFs with the Best and Worst Ratings
* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.Sources: New Constructs, LLC and company filings
Six ETFs are excluded from Figure 1 because their total net assets are below $100 million and do not meet our liquidity minimums.
Figure 2: Mutual Funds with the Best and Worst Ratings – Top 5
* Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity.Sources: New Constructs, LLC and company filings
Fidelity Mid Cap Value K6 Fund (FCMVX) is excluded from Figure 2 because its total net assets are below $100 million and do not meet our liquidity minimums.
State Street SPDR Russell 1000 Yield Focus ETF (ONEY) is the top-rated Mid Cap Value ETF and Fidelity Advisor Mid Cap Value Fund (FIDFX) is the top-rated Mid Cap Value mutual fund. Both earn a Very Attractive rating.
Nuveen ESG Mid Cap Value ETF (NUMV) is the worst rated Mid Cap Value ETF and Transamerica Small/Mid Cap Value (IIVAX) is the worst rated Mid Cap Value mutual fund. NUMV earns a Neutral rating and IIVAX earns a Very Unattractive rating.
The Danger Within
Buying a fund without analyzing its holdings is like buying a stock without analyzing its business and finances. Put another way, research on fund holdings is necessary due diligence because a fund’s performance is only as good as its holdings’ performance.
Performance of Holdings = Performance of Fund
Analyzing each holding within funds is no small task. We perform this diligence with scale. More of the biggest names in the financial industry (see At BlackRock, Machines Are Rising Over Managers to Pick Stocks) are now embracing technology to leverage machines in the investment research process. Technology may be the only solution to the dual mandate for research: Cut costs and fulfill the fiduciary duty of care. Investors, clients, advisors and analysts deserve the latest in technology to get the diligence required to make prudent investment decisions.
Figures 3 and 4 show the rating landscape of all Mid Cap Value ETFs and mutual funds.
Figure 3: Separating the Best ETFs from the Worst Funds
Sources: New Constructs, LLC and company filingsFigure 4: Separating the Best Mutual Funds from the Worst Funds
Sources: New Constructs, LLC and company filingsOur Robo-Analyst technology empowers our ETF and mutual fund rating methodology, which leverages our analysis of each fund’s holdings.
This article originally published on April 27, 2020.
Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.
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