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The S&P MidCap 400®: Outperformance and Applications Discover why this often-overlooked market segment may be worth considering.
BY Louis Bellucci

Mid-cap stocks have often been overlooked in favor of other size ranges in investment practice and in academic literature. Yet mid-caps have outperformed large- and small-caps, historically: the S&P MidCap 400 has beaten the S&P 500 and the S&P SmallCap 600 by an annualized rate of 2.03% and 0.92%, respectively, since December 1994. To better understand the historical outperformance by mid-caps, as well as their potential use within an investment portfolio, this paper:

• Provides an overview of S&P Dow Jones Indices’ methodology for defining the U.S. mid-cap equity universe;

• Outlines the so-called “mid-cap premium,” analyzing it from factor and sector perspectives;

• Shows that active managers have underperformed the S&P MidCap 400, historically;

• Highlights how mid-caps can be incorporated within a portfolio.

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