Mid-cap stocks and the related exchange traded funds (ETFs) have enjoyed the same rally as the broader market, but is there enough power behind them to sustain the momentum they have?
Mid-cap stocks and companies have done well as the broader market has recovered: in the last six months, they’re up about 45%. Only small-caps have been performing better in that time frame. Mid-cap stocks from the metals, IT, banking and auto components space have been among those to have seen increased activity, explains Jitendra Kumar Gupta for Business Standard.
The latest fundamentals have given mid-cap stocks a chance to regain their reputation and if a global rebound continues to take place, many emerging markets could give mid-caps another chance to shine. Experts attribute this to the re-rating of smaller companies, as the valuation gap between the large-caps and mid-caps has widened considerably.
Market analysts warn to tread lightly when deciding upon mid-cap stocks, as they have shown a considerable run-up and any significant correction in the market could have a larger impact on stocks of smaller companies. Have a strategy in place when investing in mid-caps, or anything else.
- iShares S&P Mid Cap 400 Fund (NYSEArca: IJH)
- Vanguard Mid Cap (NYSEArca: VO)
For more stories about mid-caps, visit our asset class ETF category.