Mid-Cap ETFs Off and Running in 2013
January 16th at 10:47am by Tom Lydon
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.
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.