Mid-sized companies with between $1.5 billion and $27 billion of market capitalization represent one of the most attractive segments of the equity market.
Over the past 20 years, mid- cap stocks have consistently delivered better risk-adjusted returns than both large- and small- cap equities.1 Mid- cap companies may offer investors greater growth potential than larger, more mature businesses with less risk and volatility than smaller cap companies.
Yet U.S. equity investors remain underexposed to mid -cap stocks. Though mid-caps make up 27% of the U.S. equity market, they represent only 14% of U.S. mutual fund assets.2
Investors seeking greater long-term growth potential than large- cap equities may offer, with less volatility than small caps exhibit, should consider increasing their allocation to mid -cap stocks.
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1 Source: Morningstar as of 12/31/15. Data based on annualized returns, standard deviation, and Sharpe ratio for the 20-year period ended 12/31/15. Mid-caps are represented by the Russell Midcap Index, large caps are represented by the Russell 1000 Index and small caps are represented by the Russell 2000 Index. Past performance does not guarantee future results.↩
2 Sources: FactSet and Morningstar as of 12/31/15.↩
The Russell Midcap® Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell 2000® index measures the performance of the small-cap segment of the U.S. equity universe.
Investments in securities of growth companies may be volatile. Mid-sized company stock is typically more volatile than that of larger company stock. It may take a substantial period of time to realize a gain on an investment in a mid-sized company, if any gain is realized at all. Diversification does not guarantee profit or protect against loss.