There are several indexes for tracking mid-cap stocks. The most widely referenced is the S&P Mid-Cap 400, but others include the Russell Midcap and Wilshire US Mid-Cap Index. Used as a tool for investing in stocks, index mutual funds, or exchange-traded funds (ETFs), a stock index is a hypothetical portfolio of securities representing a specific market, such as mid-, large- or small-cap. The term “cap” refers to market capitalization, which is calculated by multiplying a company’s stock price by its total number of outstanding shares.
Key Takeaways
- There are various indexes that track mid-cap stocks, including the Russell Midcap and the S&P Mid-Cap 400.
- FINRA defines mid-cap stocks as those with a market capitalization between $2 to $10 billion.
- Top ETFs that track the mid-cap space include the iShares Core S&P Mid-Cap ETF (IJH) and Vanguard Mid-Cap Index ETF (VO).
What Is a Mid-Cap?
FINRA defines mid-cap companies as those with a market capitalization between $2 billion and $10 billion. Small-cap companies range from $250 million to $2 billion and micro-cap companies are under $250 million. Large-cap stocks range from $10 billion to $200 billion, while mega-cap stocks have a market capitalization of $200 billion or more. Other organizations may use different ranges.
Investors interested in diversifying their portfolios beyond big stocks can use the mid- and small-cap indexes to help determine how small and medium companies are performing as a whole. An investor can also use an index as a benchmark for looking at the performance of a specific stock in comparison to other stocks in the same class.
Other indexes track very large (mega-cap) and very small (micro-cap) stocks. Indexes can also be used for tracking securities based on other criteria aside from size. Indexes are available for foreign investments and the bonds market, for example.
Investing in Mid-Cap Indexes
Certain investment management companies offer ETFs that track these indexes. These are the best investments for investors looking to get a broad range of exposure to the mid-cap space.
iShares Core S&P Mid-Cap ETF (IJH)
The iShares Core S&P Mid-Cap ETF (IJH) tracks the S&P MidCap 400 Index. The IJH has 414 holdings, with its top three being Williams Sonoma Inc (WSM), EMCOR Group Inc (EME), and Interactive Brokers Group Inc (IBKR) as of January 2025. Its top-weighted sectors are industrials and financials. The ETF has returned an annualized 10.29% over the last five years as of December 31, 2024. Its expense ratio is a low of 0.05%.
Vanguard Mid-Cap Index ETF (VO)
The Vanguard Mid-Cap Index ETF (VO) tracks the CRSP US Mid Cap Index. It has 316 holdings, with Amphenol Corp. Class A (APH), Welltower Inc (WELL), and Palantir Technologies Inc Class A (PLTR) being its top three holdings as of January 2025. VO’s expense ratio is 0.04%.
iShares Russell Mid-Cap ETF (IWR)
The iShares Russell Mid-Cap ETF (IWR) tracks the Russell MidCap Index. It has 817 holdings and an expense ratio of 0.19%. Its top three holdings are Palantir Technologies Inc Class A (PLTR), Applovin Corp Class A (APP), and Williams Inc (WMB) as of January 2025.