A Mid-Cap ETF Hitting the Sweet Spot, Up 10% YTD

“Mid-cap stocks have been in the sweet spot with respect to their risk-adjusted performance since 1926,” said Morningstar. “Although they have historically had a higher return than large caps, they have also had a higher volatility and a higher beta, or more procyclical movement with the market. But the higher return has compensated investors for taking this increased risk.”

Value stocks typically trade at cheaper prices relative to fundamental measures of value, such as earnings and the book value of assets. In contrast, growth stocks tend to run at higher valuations since investors expect the rapid growth in those company measures.

Investors are typically more aggressive during periods of heightened volatility and would chase popular growth stocks. Since growth stocks show high multiples, investors may expect that the companies will sustain a high growth rate.

As is the case with many Vanguard ETF, VOT carries a low fee. The ETF charges just 0.07% per year, or $7 on a $10,000 investment. That makes it cheaper than 94% of rival funds, according to Vanguard.

For more information on mid-caps, visit our mid-cap category.