I know this fund is based on Vanguard's own MidCap index and the Vanguard ETF, VO. But why does this fund so miserably underperform the S&P 400 MidCap index and its ETF, MDY?? Each of the seven months this year, Vanguard's MidCap index significantly underperformed MDY. You would think it would be, at the least, close, but it's not near being close. I hold some VMISX in a 401K, which is Vanguard's "signal" variance (lower fees) of VIMSX. YTD, VMISX is down 11.47% while MDY is down just 5.28%. That's a big difference for both being a MidCap index fund/ETF. MidCaps have been outperforming this year, but Vanguard's MidCaps are doing no better than the LargeCap indexes YTD.

Month-by-month VMISX vs MDY:

Month, VMISX, MDY

Jan -6.54% -6.00%
Feb -2.27% -1.06%
Mar -2.07% -1.86%
Apr +6.75% +7.92%
May +4.41% +5.44%
Jun -7.61% -7.10%
Jul -3.92% -1.82%