Mid cap

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Gkamens
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Mid cap

Postby Gkamens » Tue Mar 26, 2013 9:14 am

New to investing. While looking at model portfolios, why are mid cap funds left out while Large and Small are used?

Thanks in advance

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5MinuteMoneyTips
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Re: Mid cap

Postby 5MinuteMoneyTips » Wed Jul 17, 2013 7:38 pm

This is a great question. Like the middle child in a family (I am one), the mid-cap stocks are often forgotten. According to Investopedia, a Mid Cap stock is A company with a market capitalization between $2 and $10 billion, which is calculated by multiplying the number of a company''''s shares outstanding by its stock price. Mid cap is an abbreviation for the term "middle capitalization".

Some examples of these mid cap companies are Dillards, Cabelas and American Eagle.

Here is the answer to your question. Simplicity.

Most model portfolios are put together because they want you to invest with them. If they make it too complicated, then you will freeze and not invest. By giving you fewer choices, you are more likely to invest.

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Bichon Frise
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Re: Mid cap

Postby Bichon Frise » Thu Jul 18, 2013 9:25 pm

The real answer is midcaps are covered by a lot of index funds. many people consider the company i work for to be a midcap and it is larger than many companies in the s&p500. Also many small cap funds cover midcaps. Or a total market fund covers midcaps according to market cap.

The OP is wise to ask to ask about midcaps, but should use tools such as Morningstar‘s instant xray to see if their portfolio already covers them.
Bichon Frise

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