DEFINITION of 'S&P MidCap 400 Index'

This Standard & Poor's index serves as a barometer for the U.S. mid-cap equities sector and is the most widely followed mid-cap index in existence. To be included in the index, a stock must have a total market capitalization that ranges from roughly $750 million to $3 billion dollars. Stocks in this index represent household names from all major industries including energy, technology, healthcare, financial and manufacturing.

BREAKING DOWN 'S&P MidCap 400 Index'

Like many other stock market indexes, the S&P 400 MidCap Index is a value-weighted index, meaning that the stocks with the largest market capitalization have the most significant impact on the movement of the index. Similarly, smaller movements in the smallest companies in the index have virtually no effect on the overall movement of the index. This is an important fact to remember for investors seeking diversification, as market-cap weighted index funds primarily expose an investor to the movements of a small group of stocks, despite the broad name of the index itself.

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RELATED FAQS
  1. Is there an index for tracking mid-cap stocks?

    Learn the specifics about indexes available for tracking companies with market capitalizations in the medium-sized, small ... Read Answer >>
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    While you cannot buy indexes, which are just benchmarks, there are three ways for you to mirror their performance. Read Answer >>
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    Two good sources for finding index funds are Fidelity Investments and Vanguard. Read Answer >>
  4. Can an Index Fund Investor Lose Everything?

    There is almost zero chance that any index fund could ever lose all of its value. Read Answer >>
  5. How do indexes determine which stocks are removed or added to them?

    Stock indexes are formed based on the kinds of stocks or financial securities they want to track. For example, the Standard ... Read Answer >>
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