ProShares Leads Pack Among Mid-Cap ETFs
Do enhanced indexes, which group stocks based on fundamentals, enhance returns?
In comparing one-year returns of 25 mid-cap ETFs, which include those branded as core, growth, value, market-cap weighted and fundamentally weighted, it appears a case could be made for leveraged funds and fundamental indexing.
ProShares leads the pack among the mid-cap ETFs from iShares, SPDRs, PowerShares, ProShares, Vanguard and WisdomTree.
ProShares Ultra MidCap 400 () gained 31% in the past 12 months, as of June 27. The benchmark tracking MidCap SPDRs () gained 21%. The leveraged fund doubles the daily returns of the benchmark.
The drawback is that leveraged funds can also amplify losses. The ProShares UltraShort MidCap 400 () plunged 31% in the past year.
Intellidexes
The 75-stock PowerShares Dynamic Mid Cap Growth () tops all mid-cap ETFs that have been trading at least a year. It’s bounded 29% in the past year.
Its opposite, PowerShares Dynamic Mid Cap Value, () leapt 27%.
PowerShares’ Intellidexes screens and ranks stocks based on fundamentals, valuation, timeliness and risk. The top holdings in Dynamic Mid Cap Growth include CBOT Holdings, () MEMC Electronic Materials, () ENSCO International, () Precision Castparts, () Allegheny Energy () and Express Scripts. () Those have gained 42% (ENSCO) to 111% (Precision) the past year.
The majority of mid-cap ETFs returned 20% to 26% the past year.
The laggard among the group was WisdomTree MidCap Dividend Fund () with a 17% return, although that doesn’t include the 3% dividend.
Basket Holdings
Top holdings in the 432-stock basket: Windstream, () American Capital Strategies, () iStar Financial, () Allied Capital () and Citizens Communications. () Those gained 5% (Allied) to 30% (American Capital Strategies). They offer as much as 9% in dividends.
A variety of fundamentally weighted ETFs were introduced in the past year.
One of the ETFs is Claymore/BIR Leaders Mid-Cap Value, () which combines 100 top consensus picks of Best Independent Research LLC a group of five independent research companies.
Claymore/Zacks Mid-Cap Core () groups 100 names selected by Zacks Investment Research. Claymore/Clear Mid-Cap Growth Index () groups 50 stocks selected by quantitative formulas developed by Clear Indexes.
PowerShares launched Dynamic Mid Cap Portfolio, () which is neither growth nor value, but also picks stocks based on fundamentals, valuation, timeliness and risk.
These haven’t traded long enough to make meaningful comparisons.