Mid cap growth ETFs face headwinds

What happened: Mid cap growth ETFs, such as American Century Mid Cap Growth Impact (MID) and SPDR S&P 400 Mid Cap Growth ETF (MDYG), have crossed below their 200-day moving averages, indicating a short-term downtrend. MID's price has fallen to $65.39, nearing its 52-week low of $59.44, while MDYG traded at $78.14, below its 200-day average of $78.25. TimesSquare Capital Management's Mid Cap Growth Strategy and Madison Mid Cap Fund both underperformed their benchmarks in Q1 2026, with TimesSquare falling 7.72% and Madison declining 4.28%. Advertising pullbacks pressured Pinterest (PINS), while Curtiss-Wright Corp. (CW) rose 24% in the quarter.

Market impact: The decline in mid cap growth ETFs signals a potential rotation out of growth stocks and into value, as seen in the outperformance of the Vanguard Mid-Cap Value ETF. Companies with exposure to mid cap growth stocks may face headwinds, while value-oriented mid cap stocks could see increased investor interest. The outflows from the State Street SPDR S&P MIDCAP 400 ETF Trust indicate a shift in investor sentiment towards mid cap stocks.

What to watch next: Investors should monitor the upcoming earnings reports from mid cap growth companies, such as Pinterest (PINS) on April 27, to gauge the impact of advertising pullbacks on the sector. The performance of the Vanguard Mid-Cap Value ETF will also be crucial in determining if the rotation towards value stocks continues. Additionally, investors should keep an eye on the 52-week lows of MID and MDYG, as a break below these levels could signal further downside for mid cap growth ETFs.