Mid-Cap ETFs in High Momentum Now: More Rally Ahead?

Group 1: Mid-Cap Investing Insights - Mid-cap investing offers a blend of resilience and growth opportunities, seen as safer than small caps but riskier than large caps [1] - Many mid-cap ETFs are currently near their 52-week highs, indicating strong performance in this segment [1][8] Group 2: Large Cap Challenges - The global market remains steady but faces uncertainties due to President Trump's tariff tensions, which have reportedly reduced U.S. investment by 4.4% in 2025 [2] - IMF projects a decline in global growth from 3.3% in 2024 to 3.1% in 2026, with developed economies growing around 1.5% and emerging markets just above 4%, leading to caution among investors regarding large-cap stocks due to their foreign exposure [3] Group 3: Small Cap Opportunities - The Federal Reserve has implemented three rate cuts totaling 0.75 percentage points, which may favor small-cap stocks due to their domestic focus [4] - Projections for real GDP growth have been revised upward for 2026 to 2.3%, which could support a rally in small-cap stocks [5] - Unemployment rate projections remain stable at 4.4% for 2026, with a slight decline to 4.2% in 2027, and PCE inflation is projected at 2.5%, benefiting domestically-focused stocks [6] Group 4: Volatility and Strategy - Despite favorable projections for small caps, tariff-led inflation fears and a weakening labor market may lead to high volatility in this segment [7] - A balanced approach is recommended, focusing on mid-cap investments that combine the strengths of both small and large caps [8] Group 5: Mid-Cap ETFs Performance - Notable mid-cap ETFs include: - First Trust Mid Cap Core AlphaDEX Fund (FNX) – Up 5.2% over the past month [9] - State Street SPDR S&P 400 Mid Cap Value ETF (MDYV) – Up 4.8% over the past month [9] - SPDR S&P Midcap 400 ETF Trust (MD) – Up 3.8% over the past month [9] - iShares Core S&P Mid-Cap ETF (IJH) – Up 3.8% over the past month [9] - iShares Russell Midcap ETF (IWR) – Up 2.4% over the past month [9]