If you're interested in broad exposure to the Mid Cap Growth segment of the US equity market, look no further than the Vanguard S&P Mid-Cap 400 Growth ETF (IVOG), a passively managed exchange traded fund launched on 09/09/2010.
The fund is sponsored by Vanguard. It has amassed assets over $751.33 million, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus they have a nice balance of growth potential and stability.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.98%.
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 25.80% of the portfolio. Consumer Discretionary and Healthcare round out the top three.
Looking at individual holdings, Fair Isaac Corp. (FICO) accounts for about 1.53% of total assets, followed by Reliance Steel & Aluminum Co. (RS) and Axon Enterprise Inc. (AXON).
The top 10 holdings account for about 11.74% of total assets under management.
Performance and Risk
IVOG seeks to match the performance of the S&P MidCap 400 Growth Index before fees and expenses. The S&P MidCap 400 Growth Index measures the performance of growth stocks of medium-size U.S. companies.
The ETF has added roughly 7.59% so far this year and was up about 1.87% in the last one year (as of 06/08/2023). In the past 52-week period, it has traded between $76.85 and $94.24.
The ETF has a beta of 1.09 and standard deviation of 22.10% for the trailing three-year period, making it a medium risk choice in the space. With about 233 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard S&P Mid-Cap 400 Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IVOG is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Mid-Cap Growth ETF (VOT) and the iShares Russell Mid-Cap Growth ETF (IWP) track a similar index. While Vanguard Mid-Cap Growth ETF has $10.25 billion in assets, iShares Russell Mid-Cap Growth ETF has $12.41 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>Vanguard S&P Mid-Cap 400 Growth ETF (IVOG): ETF Research Reports
Reliance Steel & Aluminum Co. (RS) : Free Stock Analysis Report
Fair Isaac Corporation (FICO) : Free Stock Analysis Report
Axon Enterprise, Inc (AXON) : Free Stock Analysis Report
iShares Russell Mid-Cap Growth ETF (IWP): ETF Research Reports
Vanguard Mid-Cap Growth ETF (VOT): ETF Research Reports
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
