Investing - Theory, News & General • S&P MidCap 400 Value

It's a lot easier to see what I mentioned upstream by using tell-tale charts instead of growth charts, however. You'll see that the S&P Midcap 400 also has the occasional positive premium over the value version of the index as well. There will, of course, never be enough data, but the lack of a consistent premium of IJJ and the lower cost of IJH, ultimately landed me on IJH after dabbling in IJJ for a few years. Also, FWIW, because of the somewhat unique nature of how these indexes are created vs. other indexes that call themselves midcap or midcap value, finding a TLH partner was also fun. I ultimately ended up with SCHM. It's a Dow based index (also owned by S&P) and is also a count-based index (see below), but its construction rules allow some larger and smaller caps to creep in but the net result has been fairly similar performance. I don't hold any of it today.

If you're interested in S&P index funds, however, the second chart isn't very useful - there is no universally accepted definition of what midcap or value means (or any other style based index for that matter). Accordingly, each index out there has its own construction rules to decide which stocks are in and which are out of the index at any given point in time. And the S&P indexes, in particular, start with a "count" (in this case, the next 400 stocks after the S&P 500 by market cap) whereas many of the other indexes use deciles to determine the breakpoints. There's a good article on this over on portfoliocharts here: https://portfoliocharts.com/2020/02/18/ ... ally-work/

Did you really mean 4% inflation adjusted monthly withdrawals and not 4% annualized? Regardless, I tend to avoid comparing anything by starting with the assumption of some sort of SWR for a withdrawal method, especially given that's not how I'm withdrawing during retirement. Plenty of threads on that topic, though.

Below is a monthly tell-tale chart of the S&P midcap MCV index relative to the S&P midcap MCB index going as far back as I have data (middle of 1997) to about May of this year. No withdrawals assumed and note again that these are the indexes, not funds. You might also notice the general downward trend since 2006, indicating a long cycle of the MCV index underperforming the MCB index.

One more thing to note, especially with regards to style-based indexes. They're under no obligation to have kept the same construction rules that they started out with when the index was first created. It can be daunting to try and uncover all changes that might have been made by the index's owners over time. Similarly, funds are also under no obligation to stick with the same index forever. These sorts of things are among the many reasons that folks on this forum will often tend towards "total market" funds where the differences between index providers' results are a lot more narrow. YMMV.



Cheers.

The monthly telltale chart is way more insightful than the growth charts. Thanks for sharing that.

Yes, the portfoliocharts article is very good. I used that article, this Morningstar Demystifying U.S. Mid-Cap Indexing article, and this S&P MidCap 400 Outperformance and Potential Applications research paper when determining which MidCap index to use. I also landed on IJH. The lower expense ratio and lower turnover compared to IJJ are appealing. I like that there is no overlap with the S&P500. I also use the Russell MidCap index (FSMDX) which is available in my 401k plan.

Did you really mean 4% inflation adjusted monthly withdrawals and not 4% annualized?

Starting with a $10,000 initial amount with periodic monthly withdrawals of $33 (3.96%) that are inflation adjusted. I believe the inflation adjustment is monthly. Here are the portfolio visualizer settings.

Statistics: Posted by dcabler — Thu Dec 26, 2024 1:07 pm — Replies 8 — Views 843