Midcaps Poised to Outperform Large-Caps

Large-caps are getting a lot of attention and making a lot of headlines these days. And why wouldn’t they? Rather than nosedive (as many pundits and investors believed), the S&P 500 went up more than 24% over the course of 2023. Plus, large-caps tend to offer stability and balance sheet strength.

But large-cap stocks tend to be slow growers and don’t trade at a value. Apple Inc. (AAPL), for example, closed at more than $185 a share on Tuesday. So, while large-cap funds tend to be seen as safe bets, midcaps can offer both the stability of large-caps and the growth potential of small-cap stocks.

“Midcap looks more attractive than in the last several years,” Michael Sheldon, executive director at the Westport, Connecticut-based wealth management firm Hightower RDM Financial Group, told the Wall Street Journal. RDM’s clients on average have about 20% of their stock portfolios in midcaps.

See more: “Use XMHQ, XSHQ to Fill Gaps in Quality SMID-Cap Exposure

The S&P MidCap 400 was up 14.5% in 2023, which the Journal noted was just 5% shy of its record high.

The Journal added that, “some professionals say midcaps could be poised to outperform large-caps and now is a good time to build a position.” That’s where the Invesco S&P MidCap Quality ETF (XMHQ) comes into play.