The SPDR S&P MidCap 400 ETF Trust (NYSEARCA:MDY) is the original mid-cap ETF, launched by State Street in May 1995. Three decades of tenure explain why MDY still anchors mid-cap allocations across brokerage statements, retirement accounts, and options books. It tracks the S&P MidCap 400, an index that is quietly outrunning the S&P 500 this year, with the mid-cap benchmark up 15.23% year to date against the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) at 9.6%. The catch is that State Street sells the same index, from the same shop, in a cheaper wrapper. That wrapper is SPMD, and the fee gap is doing exactly what fee gaps are supposed to do.
Why Investors Still Hold MDY
For clean exposure to the 400 stocks that sit between the S&P 500 and the S&P SmallCap 600, MDY delivers. Top holdings as of May 13, 2026 include TechnipFMC at 0.87%, Casey’s General Stores at 0.84%, United Therapeutics at 0.79%, and Curtiss-Wright at 0.78%. It is deeply liquid, options-active, and older than most of its shareholders’ portfolios. For traders who need tight spreads or write covered calls, that liquidity has real value. For a buy-and-hold investor, the liquidity premium is largely irrelevant.
The Fee Drag Is the Whole Story
The gross and net expense ratio on this one is 0.23%, per State Street’s most recent fact sheet for MDY. The SPDR Portfolio S&P 400 Mid Cap ETF (NYSEARCA:SPMD) charges roughly 0.03%, cutting the fee by about 87%. Both funds are issued by State Street. Both track the S&P MidCap 400. The holdings overlap is effectively total.
The return record reflects the fee differential almost dollar for dollar. SPMD is up 15.27% year to date against MDY at 14.97%. Over one year, SPMD returned 20.08% versus 19.66% for MDY. Over five years, SPMD compounded to 52.68% against MDY’s 50.78%. Same index, same sponsor, different wrapper. The gap is the fee, compounded.
On $100,000 invested, the annual fee difference alone is roughly $200 per year. Over a decade, at mid-cap-typical compounding, that widens materially. The ten-year total return on SPMD is 188.72% against MDY’s 177.59%.
The Structural Wrinkle
Organized as a Unit Investment Trust, MDY offers the same legacy structure that governs SPY and the SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA:DIA). A UIT cannot reinvest dividends internally and cannot lend securities. Cash from dividends sits idle until the quarterly distribution, creating a small cash drag in rising markets. SPMD is a conventional open-end fund, which can reinvest dividends and lend holdings to offset costs. That structural difference compounds alongside the fee gap, and it also shows up in yield: SPMD’s trailing twelve-month distribution of $0.809954 against a $66.03 price works out to roughly 1.23%, above MDY’s 1.02%.
Where MDY Still Wins
More shares trade per day on MDY, and its options market is deep. SPMD’s options chain is thin by comparison. If part of the position is used for covered calls, cash-secured puts, or short-dated hedges, MDY remains the functional choice. Active traders moving size will also notice tighter spreads on MDY. For long-only core exposure, neither factor matters.
Making the Swap
In a tax-advantaged account, the switch is mechanical: sell MDY, buy SPMD, keep the index exposure intact. In a taxable account, embedded capital gains complicate the math. A holder sitting on years of appreciation may find that the tax bill on the sale exceeds a decade of fee savings. One workable path is to direct new contributions and dividend reinvestments into SPMD while leaving the legacy MDY position alone, letting the allocation shift over time without triggering gains.
What to Do With MDY Now
The S&P MidCap 400 is the exposure worth keeping this year. The 400 index is running well ahead of the S&P 500 on the year, and SPMD captures that at a fraction of MDY’s cost with a slightly better yield and a more modern wrapper. For long-term holders in IRAs and 401(k)s, the fee differential is the primary variable in the comparison. For taxable holders, the embedded capital gains bill on a sale can offset years of fee savings, a factor that weighs against an immediate switch even as new contributions could be directed to the cheaper ticker.
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