Mid-Cap Fund Could be a Portfolio Centerpiece

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Many investors place huge bets on the biggest stocks and the exchange-traded funds (ETFs) that track them. Those investors may reason that large companies are successful because they are well managed, strong and stable. Other investors seek high returns by betting on smaller companies that have the potential to grow much faster in relatively short time frames. However, it is possible to strike a balance and choose companies that are not as risky as the smaller ones and still have plenty of room to grow their businesses by gaining market share or expanding internationally through a fund such as iShares S&P Core Mid-Cap ETF (IJH).

The word “core” in the name of this ETF is intended to suggest that mid-cap stocks form the core of an investment portfolio and should be held for long periods of time to secure profits from their slower but often strong growth. Some investors will have heard of certain mid-cap companies, though many are far from household names. The mid-cap businesses are established enough to have less risk of big share-price drops than small stocks do.

In the past 12 months, this fund has increased its value by 12.25% to beat the S&P 500, which rose 11.7%. IJH continues to grow this year, rising more than 5% so far in 2015 while U.S. markets as a whole have been practically flat. IJH, which manages $25.9 billion, also features a dividend yield of 1.31% and has an expense ratio of 0.12%.


IJH’s assets are invested most heavily in financial services, 23.39%; technology, 17.23%; and industrials, 15.96%. In addition, 6.17% of its holdings are invested in its 10 largest positions. These include Church and Dwight Inc. (CHD), 0.68%; Signet Jewelers Ltd. (SIG), 0.67%; Advance Auto Parts Inc. (AAP), 0.66%; Quorvo Inc. (QRVO), 0.66%; and Resmed Inc. (RMD), 0.62%.

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Mid-cap stocks are appealing to many investors, whether as a core position or even as a smaller and more speculative holding in a predominantly large-cap portfolio. If you think mid-cap stocks have the right idea, consider iShares S&P Core Mid-Cap ETF (IJH).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a value investing ETF. I also invite you to comment in the space provided below.

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