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Mid-cap stocks have historically shown higher returns than their large-cap counterparts, mainly because the former tend to exhibit higher growth rates than the latter, which are subject to market over-saturation. Mid-cap stocks likewise hold competitive advantages and greater financial resources than small-cap names. Investors seeking diversified mid-cap exposure may wish to consider the following passively managed index-based mutual funds.
Note: all figures are current as of January 10, 2020.
Vanguard Mid-Cap Index Fund Investor Shares (VIMSX)
The Vanguard Mid-Cap Index Fund Investor Shares tracks the performance of the CRSP US Mid Cap Index, a broadly diversified index of mid-size U.S. company stocks. This $111 billion fund invests in all components of the underlying index, rather than adopting a sampling approach. The fund’s net expense ratio is 0.17%, and its five year average Annual Net Asset Value (NAV) return is 9.12% It’s top three sector holdings are technology (17.39%), consumer cyclicals (12.55%), and financial services (12.53%). No single holding accounts for more than 1% of the fund’s overall assets.
Due to its low-cost structure, low tracking error, and experienced management, the fund has earned a gold analyst rating and a four-star overall rating from Morningstar. It comes with no load fees and requires a $3,000 minimum initial investment. Its relatively low turnover ratio of 11% makes it highly tax-efficient.
BNY Mellon MidCap Index Fund Investor Shares (PESPX)
The BNY Mellon MidCap Index Fund Investor Shares, formerly known as the Dreyfus Mid Cap Index Fund, tracks the performance of the Standard & Poor’s MidCap 400 Index, by seeking exposure to the common stocks of all 400 U.S. medium-size companies the index lists. The fund’s net expense ratio is 0.50%, and its five year average Annual Net Asset Value (NAV) return is 8.94%.
Its top three sector weightings are in financial services (16.59%) consumer cyclicals (12.30%), and real estate (11.17%). In terms of specific companies, the funds two largest positions are in computer printer manufacturer Zebra Technologies Corp (0.74%), and Irish medical supplier Steris (0.70%).
Morningstar has awarded a four-star overall rating to the fund, which does not have load fees and carries a $2,500 minimum investment.
Fidelity Spartan Mid Cap Index Fund Investor Class (FSMDX)
The Fidelity Spartan Mid Cap Index Fund Investor Class seeks to track the performance of the Russell Midcap Index, which comprises the smallest 800 stocks included in the Russell 1000 Index. The $13 billion fund’s five year average Annual Net Asset Value (NAV) return is 9.48%, and its top five sector weightings are in technology (16.26%), industrials (14.07%), financial servicer (13.88%), real estate (10.59%), and healthcare (10.25%).
In terms of individual holdings, no single position exceeds 1% of the fund’s overall assets. Its top three holdings are financial services technology provider Fiserv Inc (0.83%), credit and debit card payment facilitator Global Payments Inc (0.68%), and defense contractor and information technology services provider L3Harris Technologies Inc LHX (0.56%).
The fund, which requires a $2,500 minimum investment and does not charge load fees, has earned a four-star overall rating from Morningstar.
Columbia Mid Cap Index Fund Class A (NTIAX)
The $3.7 billion Columbia Mid Cap Index Fund Class A tracks the performance of the Standard & Poor’s MidCap 400 Index. Like its aforementioned BNY Mellon peer, this fund’s portfolio holds positions in all 400 index-listed stocks. It holds an advantage over BNY Mellon’s product, in that it carries a slightly lower expense ratio of 0.45%. Its five year average Annual Net Asset Value (NAV) return is 8.92%.
The fund’s top five sector weightings are in industrials (17.08%), financial services (16.63%), technology (15.70%), consumer cyclicals (12.35%), and real estate (11.15%)
The fund has earned a four-star overall rating from Morningstar. It comes with no load fees and requires a $2,000 minimum investment.
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