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Mid-cap stocks mark the ‘sweet spot’ for investors

S&P, mid cap stocks, investing for retirement

Mid-cap companies, the 100th to 50th largest companies listed on the ASX, are outperforming their bigger and smaller peers, according to market indexer S&P Dow Jones Indices.

Data from a blog post by S&P Dow Jones equity indices associate director John Welling showed the S&P/ASX MidCap 50 (an index representing those middle-sized businesses) was the highest performing market segment.

Stocks listed in the S&P/ASX MidCap 50 returned 10.1 per cent return from 30 December to 13 July this year, while the ASX 200 (which represents the 200 largest businesses on the exchange) returned 3.4 per cent, and the ASX 50 (referring to the largest 50 companies on the ASX) returning 2.6 per cent.

Mr Welling said mid-cap stocks were often grouped with small-cap companies, and subsequently, investors didn’t realise the difference in performance.

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“The mid-cap segment of the Australian stock market is often overlooked and underappreciated,” he said.

“Pure mid-cap investing is not common, and often, mid- and small-cap companies are lumped together for investment purposes, diluting the unique characteristics of mid-sized companies.”

Almost half of the businesses in the big-cap indices were part of the financial sector, while the mid-cap and small-cap indices were more diverse, with “higher allocations to health care, industrials, and materials than other market cap indices”.

“Those looking for an edge in Australian equities might note that mid-caps tend to offer a unique balance between the high growth - and therefore higher risk - of small caps and the stability - but slower growth - of large caps, which has led to meaningful outperformance year-to-date,” Mr Welling said.

 

Mid-cap stocks mark the ‘sweet spot’ for investors
S&P, mid cap stocks, investing for retirement
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