The Opportunity in Mid-Cap ETFs | ETF Trends

Mid-caps, along with small-caps, tend to outperform coming out of recessions. Exchange traded funds (ETFs) this time around are no exception.

If you need evidence the mid-caps are the darlings of the market these days, look at Chipotle (NYSE: CMG). It’s up nearly 160% in 2010, gaining 26 points since late October, handily dusting the S&P 500, says ETF Market Pro. [The Role of Mid-Cap ETFs.]

But it’s not just single mid-cap stocks; ETFs that focus on mid-cap companies have outpaced the broad market, as well, and may continue to do so as the economy recovers. Other reasons to think about mid-caps in your portfolio include:

  • Small/mid sized companies tend to be under researched thus giving you an opportunity to invest in a company that is yet to be identified by the market, says Valic.
  • Such companies can offer higher growth potential going forward and therefore an opportunity to benefit from higher than average valuations. Share prices are usually much more reasonable. [The Value of Mid-Cap ETFs.]

There’s a mess of mid-cap ETFs out there for you to choose. If you want exposure to Chipotle, consider PowerShares Dynamic Mid-Cap Growth (NYSEArca: PWJ), which owns 2.7% of the eatery. Other mid-cap funds include iShares S&P Mid-Cap Growth 400 (NYSEArca: IJK), up 27% year-to-date and SPDR Dow Jones Mid-Cap Growth (NYSEArca: EMG) up 24% year-to-date.

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.