Mid-cap stocks are posting highs in 2013, with focused exchange traded funds rallying along side them. This asset class could be a happy medium for an uncertain stock market.
“These middle of the road securities, as represented by the benchmark S&P 400 Mid-Cap Index, are now at all-time highs, something that can not be said for other, more popular indices like the DJIA, Nasdaq-100 or even the S&P 500,” Eric Dutram wrote for Zacks.
Mid-cap stocks are positioned to be a safer play in the uncertain economic environment seen in the U.S. Small-caps are currently reaching highs, however, the small size of them expose the asset class to more volatility should the market turn.
Broad mid-cap ETFs are a safer way to play this area of the market. For instance, there is the iShares Core S&P Mid-Cap ETF (NYSEArca: IJH) or the SPDR S&P Mid Cap 400 ETF (NYSEArca: MDY). [Investors Bullish on Stock ETFs as S&P 500 Nears All-Time High]
Mid cap growth and value stocks are another focused ETF play that a portfolio will benefit from. Value plays tend to have higher yields on average, but do present more risk. The iShares Russell MidCap Growth Index Fund (NYSEArca: IWP) and the Vanguard Mid-Cap Growth (NYSEArca: VOT) are two options. [ETF Chart of the Day: Mid-Cap Stocks]
Mid-cap stocks offer investors both growth and stability, making them a strong choice for a portfolio. This asset class is a strong performer from a long term perspective as the asset class has outperformed both small and large-cap counterparts when looking back at a 5-year time frame. [Mid-Cap ETFs: Take Your Pick]
The S&P MidCap 400 Index rallied from late 2002 into the mid-2007 and then gave most of that back during the financial crisis, according to chartoftheday.com.
“However, the S&P 400 rebounded well by recouping all losses incurred during the financial crisis and making new record highs in a mere two years. Since mid-2011, the S&P 400 has traded in a rather choppy fashion which has helped define its current wedge-shaped trading range,” according to the website. “More recently, the S&P 400 has embarked on a sharp rally which has allowed it to break above resistance … and make new all-time record highs.”
S&P MidCap 400 Index
Tisha Guerrero contributed to this article.