The mid-caps segment has also outperformed their large-cap peers, but with lower volatility than small caps. Moreover, the returns of mid-cap stocks have also beaten those of small-cap stocks during the trailing three-, five-, and 10-year periods, with lower volatility.
Middle capitalization stocks, or sometimes referred to as the market’s sweet spot, could help investors achieve improved risk-adjusted returns. Mid-cap companies are slightly more diversified than their small-cap peers, which allows many mid-sized companies to generate more consistent revenue and cash flow and provide more stable stock prices. Additionally, they are not so big that their size would slow down growth.
“The mid-caps are well positioned to grow international revenues with a falling dollar if they are on the cusp of expanding globally and need a catalyst,” according to S&P Dow Jones. “While the large caps can benefit from the falling dollar, it is likely the mid-caps can capture more new business with the global growth opportunity. Mid-caps are also positioned generally better than small-caps for international business due to their greater size and resources.”
For more information on mid-caps, visit our mid-cap category.