Best And Worst Q1 2021: Mid Cap Growth ETFs And Mutual Funds

Summary

• The Mid Cap Growth style ranks eleventh in Q1'21.
• Based on an aggregation of ratings of 12 ETFs and 372 mutual funds in the Mid Cap Growth style.
• BFOR is our top-rated Mid Cap Growth style ETF and TMPIX is our top-rated Mid Cap Growth style mutual fund.
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The Mid Cap Growth style ranks eleventh out of the twelve fund styles as detailed in our Q1'21 Style Ratings for ETFs and Mutual Funds report. Last quarter, the Mid Cap Growth style ranked eleventh as well. It gets our Unattractive rating, which is based on an aggregation of ratings of 12 ETFs and 372 mutual funds in the Mid Cap Growth style. See a recap of our Q4'20 Style Ratings here.

Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the style. Not all Mid Cap Growth style ETFs and mutual funds are created the same. The number of holdings varies widely (from 18 to 1,529). This variation creates drastically different investment implications and, therefore, ratings.

Investors seeking exposure to the Mid Cap Growth style should buy one of the Attractive rated ETFs or mutual funds from Figures 1 and 2.

Figure 1: ETFs with the Best & Worst Ratings

* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.

Sources: New Constructs, LLC and company filings

Four ETFs (FLQM, SFYF, BOUT, QMOM) 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 & 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

Barron’s 400 ETF (BFOR) is the top-rated Mid Cap Growth ETF and Touchstone Mid Cap Fund (TMPIX) is the top-rated Mid Cap Growth mutual fund. Both earn an Attractive rating.

Global X Founder-Run Companies ETF (BOSS) is the worst rated Mid Cap Growth ETF and Sparrow Growth Fund (SGFFX) is the worst rated Mid Cap Growth mutual fund. BOSS earns an Unattractive rating while SGFFX 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. Don’t just take our word for it, see what Barron’s says on this matter.

Performance of Holdings = Performance of Fund

Analyzing each holding within funds is no small task. Our Robo-Analyst technology enables us to 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 Growth ETFs and mutual funds.

Figure 3: Separating the Best ETFs from the Worst Funds

Sources: New Constructs, LLC and company filings

Figure 4: Separating the Best Mutual Funds from the Worst Funds

Sources: New Constructs, LLC and company filings

This article originally published on Jan. 22, 2021.

Disclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Comments

[Big Mountain Jim]

The worst-rated mid-cap growth ETF, Global-X Founder-Led Companies ETF (BOSS), continues to outperform, up 130% since inception vs. 82% for the S&P 500. Read this study and you will realize why this is a great long term holding.
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