'Sweet spot' mid-cap stocks worthy of investor affection
NEW YORK — Maybe the middle child really should be the favorite.
Just like families sometimes overlook the middle kid, investors all too often pay attention to just the smallest and largest stocks. Managers of mid-cap stock mutual funds say they've experienced the middle-child syndrome for years: Small-caps are young companies that offer the thrill of big growth, the thinking goes, while large-cap companies have well-established brands and can be more dependable.
But it's the middle ones that have delivered the best results over the last generation, at least when it comes to stocks. Managers say that's because the stocks of mid-cap companies can offer the best attributes of both larger and smaller ones. Investors are now noticing the strong performance, and they poured more money into mid-cap stock funds last year than either large- or small-cap funds.
The trend weakened early this year, but mid-cap stock funds again attracted the most money last month, according to data from Morningstar.
“It really does represent the sweet spot,” said Mariana Connelly, a client portfolio manager at J.P. Morgan Asset Management. “Unlike small caps, these companies are a little more seasoned and not quite as volatile. Unlike large caps, they have a lot of room to grow.”
Different indexes vary on what defines a mid-cap company, but they generally have market values closer to $4 billion than the $467 billion value of Apple.
The biggest stocks in the S&P 400 MidCap index include $8.8 billion Advance Auto Parts and $9.5 billion Church & Dwight, which sells Arm & Hammer baking soda and Trojan condoms. The Russell Midcap index includes larger companies, such as $28.5 billion Delta Air Lines. The average company in the large-cap Standard & Poor's 500 index is worth $35.4 billion.
During the last 20 years, mid-cap stocks in the S&P 400 have returned 12.4 percent annually, including dividends. That beats the 11.2 percent annual return of the S&P 600 SmallCap index and the 9.5 percent annual return of the large-cap S&P 500 index.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Trib Total Media puts 9 Western Pa. newspapers up for sale
- Crash-prevention technology changes face of auto industry
- Bonuses on the rise, but fewer workers receive them, survey shows
- Federal Reserve Vice Chairman Fischer in spotlight as meeting nears
- What’s gained at push of a button
- Turbulent week on Wall Street leaves investors wondering what’s next
- After 90 years, Goodyear forces iconic blimp into retirement
- Regulators expect lawsuit over oil, gas rules process
- Model T cross-country road trip provides lesson in simplicity
- Mylan shareholders approve $34 billion hostile takeover bid for Perrigo
- Sentiment flickers with market drop