With ETFs, Sometimes It’s Good to Be the Middle Child

May 20th at 10:00am by Tom Lydon

12338814 The trouble with mid-caps and their exchange traded funds (ETFs) is that they don’t get the same coverage in the financial media as the large-caps. Even small-caps get more attention as investors mine through them, hoping to discover a diamond in the rough that will make them rich.

But perhaps it’s time investors give mid-caps a look, because for the last three months, they’ve been handily outperforming both the large- and small-cap ETFs. The mid-cap growth category has been up 13.1% in that time frame. The mid-cap blends are up 11% and mid-cap value is up 9.8%.

Contrast that with the large-cap category, where the values are up 2.2% and growth is up 8.9%. In the small-caps, growth is up 7% while value is up 5.1%.

The latest economic concerns have kept many away from both the smalls and the larges. The Dow and S&P have had a rough year so far, and those track the largest U.S. companies. 

Gary Gordon For ETF Expert noticed "momentum" in the iShares S&P 400 Mid-Cap Growth (IJK) in both February and April. With "cautious optimism," he says one could note that mid-cap is in an uptrend.

Growth has outdone value within the mid-cap arena, but these companies are beating the other sizes across the board, with major mid-cap indicators positive for 2008, and most are above their trend lines. Other mid-cap ETFs that give investors some middle ground:

  • iShares Russell Mid-Cap Index Fund (IWR), up 1.9% year-to-date
  • Vanguard Mid-Cap (VO), up 1.4% year-to-date
  • WisdomTree Mid-Cap Dividend Fund (DON), up 1.9% year-to-date

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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