Finding the best ETFs is an increasingly difficult task in a world with so many from which to choose.
You Cannot Trust ETF Labels
There are at least 47 different All Cap Blend ETFs and at least 256 ETFs across all styles. Do investors need that many choices? How different can the ETFs be?
Those 47 All Cap Blend ETFs are very different. With anywhere from 11 to 3661 holdings, many of these All Cap Blend ETFs have drastically different portfolios, creating drastically different investment implications.
The same is true for the ETFs in any other style as each offers a very different mix of good and bad stocks. Some styles have lots of good stocks and offer quality funds. The opposite is true for some styles, while others lie in between these extremes with a fair mix of good and bad stocks. For example, the All Cap Blend style,
Source Capital, Inc. (NYSE:SOR) is the only CEF I have found that is specifically aimed at mid-cap growth equities. It has been around since 1968 with management that has been in place for almost a decade. The management team is Eric S. Ende, Steven R. Geist and Gregory A. Herr.
There are a number of ETFs that focus on mid-cap growth, the iShares Russell Midcap Growth ETF (NYSEARCA:IWP), the iShares S&P MidCap 400 ETF (NYSEARCA:IJK) and the Vanguard Mid-Cap Growth ETF (NYSEARCA:VOT) are the largest ones. How does SOR stack up?
Data from Morningstar (5/15)
SORs price total returns over ten years trail IJK and IWP
The Mid Cap Growth style ranks ninth out of the twelve fund styles as detailed in my Style Rankings for ETFs and Mutual Funds report. It gets my Dangerous rating, which is based on aggregation of ratings of 10 ETFs and 375 mutual funds in the Mid Cap Growth style as of April 17, 2014. Prior reports on the best & worst ETFs and mutual funds in every sector and style are here.
Figure 1 ranks from best to worst the eight mid-cap growth ETFs that meet our liquidity standards and Figure 2 shows the five best and worst-rated mid-cap growth mutual funds. Not all Mid Cap Growth style ETFs and mutual funds are created the same. The number of holdings varies widely (from 23 to 579), which creates drastically different investment implications and ratings. The best ETFs and mutual funds allocate more value to Attractive-or-better-rated stocks than the