U.S. markets are off to a terrible start this year with all three key bourses down in the range of 8—12% (as of February 12, 2016), and spurring fears of a recession in the near term, like many other developed markets. Though the odds of a U.S. recession are pretty low at the current level, what is confirmed is that the U.S. economy is far from being healthy (read: 3 Inverse Leveraged ETFs Up Over 20% in the Last One Month).

Therefore, while slashing global growth forecasts, IMF curtailed the growth rate of the lone star in the developed economies pack – the U.S. – to 2.6% for both 2016 and 2017, down 0.2 percentage point for each of the years from the October projection.

All these dull demand for the small-cap stocks and the related ETFs – which were outperformers last year. Though small caps rode out sturdy U.S. growth last year as this part of the capitalization spectrum better reflects the domestic economic health, these stocks are currently facing weakness as a bit of a risk off trade took over the market.

Meanwhile, large caps, thanks to their wider foreign exposure, are likely to be hit by European worries, slowdown in China, the return of recession in Japan and emerging market uncertainty. Overall, the situation is not favorable either for small cap ETFs due to the ongoing moderation in the U.S. economy, or for the large caps due to a still sagging global economy.

This makes mid cap ETFs more intriguing as these offer the best of both worlds and get mileage out of a better U.S. growth rate among developed countries. Many mid-caps have some foreign exposure, but not at a heightened level. Plus, a relatively subdued U.S. dollar is also favoring the case for foreign market investing.
 
Moreover, honing in on value securities in this capitalization level allows investors to earn more returns. This is because the global market has been rough so far this year; the benchmark treasury yields fell fast last month, several developed markets are exercising negative interest rate policies and the chances of faster rate hikes are less likely with the Fed this year (read: Top-Ranked Value ETFs & Stocks to Beat a Choppy Market).
 
All these have brightened demand for value or quality ETF investing and the worth of the higher current income. We have found a number of mid-cap value ETFs that are expected to outperform in the near term. Some of these ETFs easily crushed the broader market in the last one month (read: 5 ETFs for Portfolio Safety, Stability and Diversification).
 
ProShares Russell 2000 Dividend Growers (SMDV)

The $27.6-milliom fund targets companies that are currently members of the Russell 2000 Index and have increased dividend payments each year for at least 10 years. The fund charges 40 bps in fees. The fund is heavy on Utilities (30.9%) while Financials (19.5%), Industrials (18.8%) and Consumer Staples (13.3%) also have double-digit exposures. The fund was up 3.3% in the last one month (as of February 12, 2016). The fund yields 1.82% annually (as of February 12, 2016).
 
ProShares S&P MidCap 400 Dividend Aristrocrats ETF (REGL)

The $16.9-million ETF targets companies that are currently members of the S&P MidCap 400 Index and have increased dividend payments each year for at least 15 years. The fund targets 40 bps in fees. This fund invests 24.9% in the financial sector followed by 20.1% in Utilities sector, 17.5% in the Industrial and 12.9% in Financials stocks. The fund yields 1.71% annually (as of February 12, 2016) and added 2.8% in the last one month.
 
PowerShares S&P MidCap Low Volatility ETF (XMLV)
 
The $159-million ETF targets the performance of 80 of the least volatile stocks from the S&P MidCap 400 Index over the past 12 months. The fund holds 77 stocks in its portfolio. The fund is heavy on Financials (47.7%) followed by 12.4% in Utilities, 11.8% in Industrials and 8.3% in Materials. The fund charges 25 bps in fees. The fund yields 1.91% annually (as of February 12, 2016) and returned 0.9% in the last one month.
 
iShares Morningstar Mid-Cap Value (JKI)
 
The $168-million ETF looks to track the performance of Morningstar Mid Value Index. This $187-stock fund has double-digit exposure in financials (20.8%), utilities (19%) and IT (12.4%) stocks. The fund charges 30 bps in fees and yields 2.49% annually (as of February 12, 2016). The fund added 0.6% in the last one month.
 
iShares S&P Mid-Cap 400 Value ETF (IJJ)

The $3.5-billion ETF holds 306 stocks in its basket. The fund invests 26.5% of its assets in financial stocks while industrials (16.7%), IT (12.6%), consumer discretionary (12.0%), Utilities (10.5%) have double-digit exposure in the fund. The fund yields 2.01% annually (as of February 12, 2016) and added 0.6% in the last one month.