’Mid Caps’ are companies with market capitalization values between $2 billion and $10 billion.
Mid caps, as their name indicates, are companies not large enough to be large cap and not small enough to be small cap. As such, they are medium risk investments that generate medium returns. Their betas are generally higher than large caps but lower than small caps. Mid cap companies are generally older than small caps, but they still hold growth potential with the possibility of becoming a large cap. Mid caps are often leading indicators of a bull market. Mid caps generating high returns can indicate a potential bull market in the near horizon.
Because they are less risky than small caps but generate a higher return than large caps, mid caps can prove very important to investors. A well-diversified portfolio should have a handful of well picked mid caps with good growth potential and solid fundamentals.