In the Middle Lies Opportunity: The Case for Mid Caps
Despite their attractive risk and return characteristics, U.S. mid cap stocks are frequently overlooked by equity investors; that may be hurting their portfolios’ potential returns.
• U.S. mid cap stocks have a demonstrated history of delivering superior returns when compared to small and large cap companies, thanks to higher underlying growth rates;
• Their attractive valuations and historic outperformance in bear markets suggest the time may be ripe to consider the asset class.
Two of the major factors that drive the returns of a company’s equity are its ability to grow, and its ability to generate profit from its sales. Investors seeking the former typically look to small companies, which are in the early growth stages and are thought to have the greatest growth potential, while those looking for the latter generally turn to large cap companies, which have demonstrated their ability to generate profit.