4 Best US Mid-Cap Index Mutual Funds

Investing

Mid-cap stocks are the unsung heroes of the stock market, often holding their own against their large-cap counterparts. The S&P MidCap 400 Index has returned an average of 8.94% annually over the past 10 years. Mid-cap stocks likewise hold competitive advantages and greater financial resources than small-cap names. Investors seeking diversified mid-cap exposure may wish to consider the following passively managed index-based mutual funds.

Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX)

The Vanguard Mid-Cap Index Fund Admiral Shares is a low-cost fund that provides broad exposure to mid-cap equities. The fund has a 0.05% expense ratio and requires a minimum investment of $3,500. As of the end of May 2020, the fund held $105 billion in assets spread across 341 stocks. Its five-year average annual return was 6.19%, compared with 6.21% for its benchmark. Top holdings were financials (19.7%), technology (19%), industrials (17.2%), healthcare (10.8%) and consumer services (10.3%). Its largest individual positions included Newmont (NEM), Centene (CBC), SBA Communications (SBAC), Lululemon (LULU) and DexCom (DXCM). In August 2019, Morningstar Research awarded a five-star rating to Vanguard Mid-Cap Index Fund Admiral Shares.

Vanguard offers an ETF version of the fund, Vanguard Mid-Cap ETF (VO), which has a slightly lower expense ratio at 0.04%. Another version of the fund, Vanguard Mid-Cap Index Fund Investor Shares (VIMSX), is closed to new investors.

BNY Mellon MidCap Index Fund Investor Shares (PESPX)

This fund aims to match the performance of the S&P MidCap 400 by being fully invested in stocks included in the index and buying futures whose performance is tied to the index. It seeks a 0.95 correlation before fees and expenses. The fund has a 0.25% total expense ratio and requires a minimum investment of $2,500. As of June 2020, it held $2 billion in assets. The fund has registered a 4.18% five-year average annual return, compared with 4.68% for its benchmark. Top holdings were financials (19.71%), industrials (13.65%), healthcare (11.08%), technology (10.84%) and retail (4.73%). Its largest individual positions included Tyler Technologies (TYL), Teledyne Technologies (TDY), Catalent (CTLT), Masimo (MASI) and FactSet Research Systems (FDS). Morningstar Research has given the fund an overall rating of three stars.

Fidelity Mid Cap Index Fund (FSMDX)

The Fidelity Mid Cap Index Fund aims to provide results that match the total return of mid-cap companies in the United States. It typically invests 80% of assets in stocks included in the Russell Midcap Index. There is a 0.025% gross expense ratio and no minimum investment required. As of the end of May 2020, the fund held $12.8 billion in assets. Its five-year average annual return was 5.94%, matching its benchmark. The fund had allocated 20.04% of assets to information technology, 13.51% to industrials, 12.19% to healthcare, 11.08% to financials and 10.6% to consumer discretionary. Top individual holdings included Fiserv (FISV), Advanced Mirco Devices (AMD), Global Payments (GPN), L3 Harris Technologies (LHX) and Dollar General (DG). Morningstar Research has given the fund an overall rating of four stars.

Columbia Mid Cap Index Fund Class A (NTIAX)

This fund tracks the performance of the S&P MidCap 400 by fully replicating the index. It has 0.58% gross expense ratio and requires a minimum investment of $2,000. As of the end of May 2020, the fund held $3 billion in assets. Its five-year net asset value (NAV) return was 4.18%, compared with 4.68% for its benchmark. Top holdings were industrials (16.54%), information technology (16.45%), financials (14.73%), consumer discretionary (13.53%) and healthcare (11.8%). Morningstar Research has given the fund an overall rating of three stars.

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