iShares S&P MidCap 400 Index (ETF) (IJH)

paladin65 (22.65) Submitted: 8/1/2008 10:04:34 PM : Start Price: $78.33 IJH Score: -2.12

3 to 5 star stock in one year.

NetscribeETF (90.41) Submitted: 1/29/2007 7:46:20 AM : Start Price: $79.84 IJH Score: -4.23

iShares S and P MidCap 400 Index (IJH) tracks the S and P MidCap 400 Index, which include midsize companies that have market capitalization between $1 billion and $4 billion. With prime exposure into financial, IT and industrial sectors, the index restricts itself to high-quality companies with four consecutive quarters of positive earnings, thereby giving a broad diversification to its investors.

For the past two years, the Federal Reserve’s key job has been to raise interest rates, ensuring that inflation remains under control. Unfortunately, at this stage of the cycle, inflation and growth indicators frequently send mixed signals, with high interest rates slowing down the economy. With weakening domestic demand and a tough competition from bigger companies, the mid-cap companies will have to perform outstandingly to get away with the slowing economic conditions.

IJH has underperformed its competitors with its five-year average returns, falling well short of iShares Russell Mid-Cap Index and Vanguard Mid Capitalization Index returns. Its one-year return as of September 2006 is just 6.42% against 6.56% reported by benchmark index.

IJH also doesn't stand up well when expenses are considered, with its 0.20% expense ratio being not the cheapest way to put on mid-cap exposure. Vanguard's Mid-Cap ETF VO 0.13% price mark should certainly stimulate the investors’ sentiments. Furthermore, Vanguard Mid Capitalization Index, charges just 0.22% in fees, but investors don't have to pay a brokerage commission to invest in it. Endorsing the same, the fund tends to be the cheaper in the long run and for those are going to make regular investments in the coming years.

Though, the fund provides a broad mid-cap exposure, other ETFs have lower expense ratios and more tax-efficient benchmarks that dull this fund's competitive edge.