Should BNY Mellon US Mid Cap Core Equity ETF Be on Your Investing Radar?

Designed to provide broad exposure to the Mid Cap Blend segment of the US equity market, the BNY Mellon US Mid Cap Core Equity ETF BKMC is a passively managed exchange traded fund launched on 04/09/2020.

The fund is sponsored by Bny Mellon. It has amassed assets over $495.10 million, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus, companies that fall under this category provide a stable and growth-heavy investment.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.04%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.39%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 26.60% of the portfolio. Consumer Discretionary and Healthcare round out the top three.

Looking at individual holdings, Godaddy Inc - Class A GDDY accounts for about 0.64% of total assets, followed by Leidos Holdings Inc LDOS and Texas Pacific Land Corp TPL.

The top 10 holdings account for about 5.48% of total assets under management.

Performance and Risk

BKMC seeks to match the performance of the MORNINGSTAR U.S. MID CAP INDEX before fees and expenses. The Morningstar US Mid Cap Index is a float-adjusted market capitalization weighted index designed to measure the performance of U.S. medium-capitalization stocks.

The ETF has added about 9.48% so far this year and it's up approximately 21.08% in the last one year (as of 09/16/2024). In the past 52-week period, it has traded between $75.04 and $99.80.

The ETF has a beta of 1.02 and standard deviation of 19.22% for the trailing three-year period. With about 407 holdings, it effectively diversifies company-specific risk.

Alternatives

BNY Mellon US Mid Cap Core Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, BKMC is a good option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Mid-Cap ETF VO and the iShares Core S&P Mid-Cap ETF IJH track a similar index. While Vanguard Mid-Cap ETF has $67.95 billion in assets, iShares Core S&P Mid-Cap ETF has $88.17 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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