Since mid caps became their own investment category in 1981 they have generated annualized returns of 12.4%, on average. In contrast, the Standard & Poor’s 500 stock index, which is a benchmark for big corporations, generated annualized returns of 10.1% during the same 27-year period ending in 2008, while the Russell 2000 index of small caps earned a yearly 8.8%.
An excellent way to invest in mid caps is through exchange-traded funds (ETFs), because they provide investors a broad swath of companies. I prefer mid-cap value ETFs because historically value stocks, regardless of their size, have performed better than their growth peers. Use either of the following ETFs…
iShares S&P MidCap 400 Value Index (IJJ). Recent share price: $48.40. Yield: 3.1%.
iShares Russell MidCap Value Index (IWS). Recent share price: $26.89. Yield: 3.1%.