Oftentimes, mid-caps are seen as the sweet spot between achieving growth-like gains of small caps and the quality of large caps. Investors who are not privy to the mid-cap arena can always opt for an actively managed strategy if they have reservations.
One of the resounding benefits of mid-caps is their performance over the years. Given the market uncertainty, large caps might be the default move, but mid-caps can also capture the upside of small caps without the added risk or volatility.
“If you look historically, mid-cap value has been one of the best-performing asset classes,” a William Blair post in Seeking Alpha explained. “Over time, it’s been one of the best risk-adjusted returns. And then within that, you’ve had very few periods of time, if ever, when it’s been the worst-performing asset class compared to other indices and has been the best performing several times. So we think overall, fundamentally, it’s a terrific place to invest.”
As mentioned, mid-cap exposure can still provide investors with exposure to companies that have the flexibility to withstand substantial changes in their respective business sectors. If something changes, they’re not mired in the bureaucratic red tape that can sometimes stifle large businesses but mimic small caps where they have the skill to change course if necessary.
“And then just as importantly, we think it’s a terrific place to add value through active management,” the William Blair post added. “We think it shares a lot of the same characteristics as small-cap, where many of the companies are underfollowed from a sell-side research perspective. But we also think the companies are small enough and nimble enough to effect change that can really create meaningful shareholder value as well.”
An Actively Managed ETF Option in Mid Caps
One fund to consider for actively managed mid-cap exposure is the American Century Mid Cap Growth Impact ETF (MID). The fund seeks to invest in mid-cap companies that generate or could generate social and environmental impact alongside of financial return.
Uses proprietary fundamental research to:
- Identify mid-cap stocks managers believe it will increase in value over time.
- Identify companies that, according to the United Nations Sustainable Development Goals (SDG), generate, or could generate, ESG impact alongside a financial return.
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