Diversification among market capitalization categories provides investors the opportunity to achieve a balanced risk-adjusted return over time. Large-cap holdings offer stability due to established reputation and demand in the marketplace, while small-cap holdings have ample opportunity to appreciate over time. Investors benefit from including mid-cap equities in a portfolio because mid-cap stocks offer growth potential that can be greater than large-cap stocks with less volatility than small-cap holdings.
Mutual funds with an investment objective focused on capital appreciation within the mid-cap market allow investors to gain exposure to a broad range of company stocks within various regions and operating in different sectors. Prior to investing in a mid-cap growth mutual fund, review the most recent fund prospectus to understand the overall risk of the investment.
The Nicholas Fund was established in July 1969. Since that time, it has accumulated $3.69 billion in assets. The mutual fund seeks to increase the investment's overall value over time through capital appreciation by investing in common stock of domestic companies. Fund managers analyze the growth potential of holdings by reviewing annual sales volume, market capitalization and industry position. The fund primarily invests in mid- and large-cap companies based on these growth factors. As of December 2015, the mutual fund has generated a 10-year annualized return of 9.15%.
The majority of assets held within the Nicholas Fund are domestic equities, although fund managers currently allocate 4.23% to securities of foreign issuers located in the greater European region. Companies that fall within the mid-cap range make up 38.75% of the fund's investment mix, followed by giant-cap securities at 35.79% and large-cap equities at 22.53%. Diversification is achieved through sector allocations, with consumer cyclical stocks making up 28.99% of the portfolio, health care stocks making up 22.58%, industrial stocks making up 14.02% and financial services stocks making up 11.51%. Top holdings include Valeant Pharmaceuticals at 5.74%, Gilead Sciences at 4.58%, Walgreens Boots Alliance at 4.05% and O'Reilly Automotive at 3.31%.
The fund has a net expense ratio of 0.72%. Investors are not charged a sales load when they purchase or redeem shares, but a $500 minimum initial investment is required.
PrimeCap Odyssey Aggressive Growth Fund
The PrimeCap Odyssey Aggressive Growth Fund has an inception date of September 2004, and since that time has accumulated $6.66 billion in assets. Fund managers provide investors with the opportunity to achieve long-term capital appreciation. This investment objective is met by investing a substantial amount of the fund's assets in common stock of companies with rapid earnings growth potential based on fund manager analysis. Investment is not restricted to specific market sectors or market capitalization categories, but the fund has historically focused its allocation on mid- and small-cap equities. As of December 2015, the mutual fund has generated a 10-year annualized return of 12.08%.
Domestic equities make up 91.89% of the investment mix, with 3.05% of assets allocated to greater European developed markets and 5.07% allocated to greater Asian developed and emerging markets. The PrimeCap Odyssey Aggressive Growth Fund invests across all market capitalization ranges, with 28.01% in mid-cap companies, 26.40% in small-cap, 22.68% in large-cap, 13.64% in micro-cap and 9.27% in giant-cap. The largest sector exposure is in health care stocks at 32.38%, followed by technology companies at 29.9%, industrials at 17.62% and consumer cyclical at 11.98%. The top holdings include Abiomed at 4%, Ellie Mae at 3.03%, Sony at 2.97% and United Continental Holdings at 2.8%.
The fund has a net expense ratio of 0.62%, lower than the category average for mid-cap growth mutual funds. Investors are not assessed a sales load when they purchase or redeem shares, although a $2,000 minimum initial investment is required.
Vanguard Mid-Cap Growth Fund
The Vanguard Mid-Cap Growth Fund was established in December 1997 and currently manages $4.38 billion in assets. The mutual fund seeks to provide long-term capital appreciation by investing at least 80% of fund assets in common stocks of companies that fall within the mid-cap range. Fund managers utilize fundamental analysis to determine which securities possess above-average growth prospects. As of December 2015, the fund has generated a 10-year annualized return of 8.76%.
Minimal foreign exposure is provided through investing in the Vanguard Mid-Cap Growth Fund, as 97.34% of the portfolio is focused on domestic companies. However, investors gain access to a range of market sectors, including consumer cyclical stocks at 29.43%, industrial stocks at 20.08%, financial services stocks at 14.24% and health care stocks at 12.35%. Fund managers do not currently invest in giant- or micro-cap stocks, but they emphasize mid-cap companies, which make up 71.53% of the portfolio. Top holdings include Old Dominion Freight Lines at 2.83%, Brunswick at 2.51%, Vantiv at 2.5% and Hanesbrands at 2.21%.
This mutual fund has a relatively low net expense ratio of 0.46%, and investors are not charged a sales load when they purchase or redeem shares. A $3,000 minimum initial investment is required.
Janus Enterprise Fund
The Janus Enterprise Fund has an inception date of July 2009 and currently manages $6.44 billion in investor assets. The investment objective is long-term growth of capital, achieved by investing a substantial amount of the fund's assets in common stock of select companies. Fund managers review prospective holdings to determine which organizations have high growth potential based on projected earnings. Typically, the fund invests at least half of the portfolio in mid-cap companies, similar to those that fall within the range of companies in the Russell Midcap Growth Index. Fund managers are not restricted in terms of domestic or foreign holdings and may include emerging markets to achieve optimal growth over time. As of December 2015, the fund has generated a five-year annualized return of 13.24%.
The majority of the mutual fund's holdings are categorized as domestic securities, although there is slight exposure to greater European and greater Asian markets. Technology companies make up the heaviest sector weighting within the fund at 29.19%, followed by industrial companies at 28.09%, health care companies at 15.64% and consumer cyclical companies at 10.08%. Currently, 63.47% of the investment mix of the Janus Enterprise Fund is allocated to mid-cap securities, with 24.27% made up of large-cap stocks and 10.24% small-cap stocks. Top holdings include Crown Castle International at 3.69%, Verisk Analytics at 3.02%, Sensata Technologies at 2.87% and Lamar Advertising Company at 2.36%.
The net expense ratio is 1.16%, which is slightly higher than the category average for mid-cap growth funds. Investors are charged an upfront sales load of 5.75% when they purchase shares, but no charge is assessed at redemption. A minimum initial investment of $2,500 is required.
MFS Mid Cap Growth Fund
The MFS Mid Cap Growth Fund has an inception date of December 1993 and currently manages $1.82 billion in assets. Fund managers seek to provide investors with capital appreciation over the long term by investing a substantial amount of the assets in mid-cap companies. Analysis of each potential holding determines long-term growth prospects, and market capitalizations of holdings are often similar to those of issuers found in the Russell Midcap Growth Index. As of December 2015, the fund has generated a 10-year annualized return of 5.13%.
Minimal exposure to foreign issuers exists within the MFS Mid Cap Growth Fund, as 97.24% of the portfolio is allocated to domestic securities. Sector diversification is present, with 25.45% in consumer cyclical stocks, 18.72% in industrial equities, 15% in technology stocks and 13.53% in health care companies. Mid-cap companies make up 68.57% of the investment mix, followed by large-cap companies at 19.83% and small-cap companies at 7.76%. Top holdings include Gartner at 2.26%, Bright Horizons Family Solutions at 2.25%, Roper Technologies at 2.23% and Ross Stores at 2.16%.
This fund has a net expense ratio of 1.2%, and investors are charged an upfront sales load of 5.75%. No deferred sales charge is imposed when investors redeem shares, but a minimum initial investment of $1,000 is required.