Mid-cap stocks are the unsung heroes of the stock market, often holding their own against their large-cap counterparts. Mid-cap is short for mid-capitalization, which typically describes mid-sized corporations with a market value of $2 billion to $10 billion. The S&P MidCap 400 Index has returned an average of 10.41% annually over the past 10 years as of May 13, 2021.
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.
The Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX)
The Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX) is a low-cost fund that provides broad exposure to mid-cap equities. The fund has a 0.05% expense ratio and requires a minimum investment of $3,000 as of April 29, 2021. As of the end of March 31, 2021, the fund held $142.5 billion in assets spread across 364 stocks. Its five-year average annual return was 14.60%, compared with 14.62% for its benchmark.
The top industries by weighting for the VIMAX as of March 31, 2021, include:
- Technology: 18.10%
- Consumer discretionary 16.10%
- Industrials 14.20%
- Financials 11.50%
- Healthcare 11.10%
Some of the top ten holdings for the VIMAX, which represent 6.20% of the overall fund, include:
- IDEXX Laboratories Inc.
- Microchip Technology Inc.
- Chipotle Mexican Grill Inc.
- Amphenol Corp.
- Digital Realty Trust Inc.
- Cadence Design Systems Inc.
Vanguard also offers an exchange traded fund (ETF) called the Vanguard Mid-Cap ETF (VO), which is very similar to the VIMAX. However, the ETF version has a slightly lower expense ratio at 0.04% and only requires the purchase of one share for its minimum investment requirement.
BNY Mellon MidCap Index Fund Investor Shares (PESPX)
BNY Mellon's PESPX aims to match the performance of the S&P MidCap 400 by being fully invested in stocks included in the index and buying futures whose performance is tied to the index. It seeks a 0.95 correlation before fees and expenses. The fund has a 0.25% total expense ratio and requires a minimum investment of $2,500 as of March 01, 2021.
As of May 13, 2021, the PESPX held $2.46 billion in assets. The fund had registered a 14.55% five-year average annual return, compared with 14.37% for its benchmark as of April 30, 2021.
The top industries by weighting as of April 30, 2021 include:
- Financials: 20.80%
- Industrials: 14.68%
- Healthcare: 10.73%
- Technology: 8.97%
- Retail: 6.00%
Of the 402 investments in the PESPX, some of the top ten holdings as of April 30, 2021, include:
- Bio-Techne: 0.70%
- Charles River Laboratories International: 0.70%
- Fair Isaac: 0.64%
- Cognex: 0.64%
- Molina Healthcare: 0.62%
- Signature Bank: 0.60%
The Fidelity Mid Cap Index Fund (FSMDX)
The Fidelity Mid Cap Index Fund (FSMDX) aims to provide results that match the total return of mid-cap companies in the United States. It typically invests 80% of assets in stocks included in the Russell Midcap Index.
There is a 0.025% expense ratio and no minimum investment requirement as of June 29, 2020. As of the end of April 30, 2021, the fund held $21.95 billion in assets. Its five-year average annual return was 15.57%, nearly matching its benchmark of 15.58% as of April 30, 2021.
The top industries by weighting for the FSMDX as of April 30, 2021 include:
- Information technology: 18.77%
- Industrials: 15.76%
- Healthcare: 12.12%
- Consumer discretionary: 12.05%
- Financials: 11.74%
There are 832 holdings in the FSMDX. Some of the top ten holdings, which represent 4.45% of the fund as of March 31, 2021, include:
- KLA Corporation
- Twitter Inc.
- Twilio Inc. Class A
- Ford Motor Company
- Freeport McMoran Inc.
- Align Technology Inc.
The Columbia Mid Cap Index Fund Class A (NTIAX)
Columbia's NTIAX tracks the performance of the S&P MidCap 400 by fully replicating the index. The fund has a 0.45% net expense ratio as of May 1, 2021.
As of April 30, 2021, the NTIAX had $3.67 billion in assets and a $2,000 minimum investment requirement. Its five-year average annual return was 14.56%, compared with 15.10% for its benchmark as of April 30, 2021.
The top sector holdings as a percentage of the fund as of April 30, 2021, were:
- Industrials: 19.07%
- Financials: 15.92%
- Consumer discretionary: 14.82%
- Information technology: 12.92%
- Healthcare: 11.73%
There are 401 holdings in Columbia's NTIAX. Some of the top ten holdings, which represent approximately 5.00% of the fund as of March 31, 2021, include:
- Solaredge Technologies: 0.65%
- Bio-Techne: 0.65%
- Charles River Laboratories: 0.63%
- Williams-Sonoma: 0.60%
- Molina Healthcare: 0.59%
- Signature Bank: 0.56