Mid-Cap
Candlefocus EditorDue to their location in the growth curve, mid-cap companies are well-positioned to benefit from potential growth opportunities, as they usually have enough cash flow to fund these initiatives. According to financial markets, these stocks are between large-cap companies, which have a greater degree of stability and smaller cap ones, which are more volatile and untested. This midpoint can offer opportunities for both growth and safety, making them potentially attractive for investors.
Investors can buy mid-cap stocks in three ways, including through brokerage platforms, mutual funds or exchange-traded funds (ETFs). When you buy mid-cap stocks directly, it means you own shares of the underlying companies and there is a possibility of getting capital gains when stock prices increase. On the other hand, ETFs and mutual funds provide you with access to several mid-caps in a single purchase.
Mid-cap stocks typically have lower trading volumes than large-cap stocks, meaning they can sometimes be less liquid. This also means that mid-cap stocks tend to have wilder swings than their larger peers. While this can create volatility, it also means investors can benefit from strong performances.
Overall, mid-cap stocks can provide investors with the opportunity to achieve a combination of stability, growth and the potential for higher returns. By taking a tailored approach to portfolio construction, investors can potentially tap into the benefits of investing in mid-cap stocks.