3 Mid-Cap ETFs Poised for 35% Growth as Economy Heats Up

Core Insights - Mid-cap stocks are positioned to benefit from the next market rally as they are often priced more cheaply compared to large-cap stocks, despite holding similar growth potential [1] - Historically, mid-cap stocks have outperformed large-cap stocks, with the S&P 400 index gaining 2,679% since 1991 compared to the S&P 500's 2,021% [2] - If economic conditions remain favorable, mid-cap ETFs could yield annual returns of approximately 11% over the next few years [3] iShares Core S&P Mid-Cap ETF - The iShares Core S&P Mid-Cap ETF is the largest mid-cap core ETF, tracking the S&P 400 index, with an annual fee of 0.05% and a focus on profitable companies [5] - Its sector exposures include industrials (19.3%), consumer discretionary (15.3%), and financials (13.6%), providing diversification compared to the S&P 500 [6] - A total return of 35% for the iShares Core S&P Mid-Cap ETF over the next three years is considered reasonable if revenue growth and margin improvements occur [7] Vanguard Mid-Cap Value ETF - The Vanguard Mid-Cap Value ETF utilizes valuation metrics to ensure true value exposure, with a focus on financials and industrials, which typically perform well during economic growth [9][10] - The ETF's structure minimizes style drift, enhancing its potential for outperformance as market conditions improve [10] Invesco S&P MidCap Quality ETF - The Invesco S&P MidCap Quality ETF targets companies with strong fundamentals, such as return-on-equity and financial leverage, resulting in a concentrated portfolio of around 80 stocks [12] - This ETF aims to reduce downside risk while maintaining upside potential, making it suitable for investors concerned about mid-cap volatility [12][13] Overall Outlook for Mid-Cap Stocks - The outlook for mid-cap stocks remains positive due to good earnings growth, lower interest rates, and attractive valuations compared to large caps, suggesting a favorable investment environment over the coming years [14]