How to Read Stock Tables
Signs the Value of Your Stock Options Could Be in Trouble
How to Interpret Technical Stock Analysis Chart Patterns

Stock ETFs: What about the Mid Caps?

One word on mid cap ETFs . . . why? Yes, for the past several years mid cap stocks — investments in companies with roughly $5 to $20 billion in outstanding stock — have performed especially well. They’ve done better than large caps and have even given small cap stocks a run for their money. But such outperformance of mid cap stocks is a fluke. So, too, is any underperformance.

If you look at the risk/return profile of mid caps over many years, you find that it generally falls right where you would expect it to fall: smack dab in between large and small cap.

Owning both a large cap and small cap ETF, therefore, will give you an average return very similar to mid caps but with considerably less volatility because large and small cap stocks tend to move up and down at different times.

Keep in mind, too, that most large cap and small cap funds are rather fluid: You will get some mid cap exposure from both. Many sector funds — including real estate, materials, and utilities — are also chock-full of mid caps.

blog comments powered by Disqus
The Annual Report for Stock Investors: Financial, Management, and Stock Information
What Is Call Buying in Stock Trading?
Protecting Yourself from Pitfalls in Penny Stocks
How to Place Advanced Conditional Orders for Your Stock Investments
The Annual Report for Stock Investors: Board Chair Letter and Company Offerings