As I just said, it’s difficult to beat the market. But the iShares Core S&P Mid-Cap ETF is awfully, awfully darn good at it. From a total performance perspective, the IJH has beaten the IVV in every meaningful time period, from one month to 15 years.
And yet, very few people talk about the IJH, just as very few people talk about the companies that make it tick, such as veterinary supplier Idexx Laboratories, Inc. (IDXX) and plant-based food and beverage producer WhiteWave Foods Co (WWAV).
So … what’s the deal?
Mid-cap companies are frequently referred to as the market’s “sweet spot.” That’s because, as Hennessy Funds describes in a recent whitepaper, they typically feature much more robust long-term growth potential than their large-cap brethren, but more financial stability, access to capital and managerial experience than their small-cap counterparts. The result:
“Using standard deviation as a statistical measure of historical volatility, investors in mid-cap stocks have consistently been rewarded with lower risk relative to small-cap investors over the 1, 3, 5, 10, 15 and 20 years ended December 31, 2015. While mid-caps have historically exhibited higher standard deviation than large-caps, investors were compensated for this higher volatility with higher returns for the 10, 15 and 20 year periods.”
Ben Johnson, CFA, director of global ETF research for Morningstar, points out that “an investment in a dedicated mid-cap fund reduces the likelihood of overlap with existing large-cap allocations and stands to improve overall portfolio diversification.”
In other words, IJH is an outstanding fund, but don’t consider it an S&P 500 replacement — consider it an S&P 500 complement.
SEE ALSO FROM INVESTORPLACE: The Top 10 Mutual Funds to Buy for 2017
Source: Kiplinger
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