Midcap funds and ETFs

By pjain      Published March 24, 2021, 7:10 p.m. in blog Invest   

Midcap Investing criteria and Lessons

  1. excellent management team

  2. an established competitive advantage over peers

  3. A long runway for growth so doesn't poop out like lots of small and midcaps ie large and growing market

  4. ORGANIC Aren’t sensitive to cyclical swings in the economy or commodity prices

High Return expecations - Double in 5 years

  • Most disruptive Midcap growth including Ark Invest want EPS>15%, so stock double in five years


Hunting for high-quality stocks, avoiding firms with high levels of debt and seeking those with competitive advantages over peers and high returns on invested capital (a measure of profitability).

Stress Test - Can we hold it through major declines?

Consider a worst-case scenario: declining revenues, shrinking profit margins and investors’ souring on the stock. If they believe a 25% decline in the share price could be in the cards over the next 12 months, the managers move on.

Value - don't overpay PHE

Favoring stocks that trade inexpensively against measures such as earnings and free cash flow (cash profits left over after capital outlays) relative to other companies in their industry.

Benchmark: Russell Midcap Growth index.

=== Midcap Growth ETFs

Select Midcap Growth Funds with Great 3,5,10 year returns as of Mar'2021

  • SRC https://www.morningstar.com/mid-cap-growth-funds

MPEGX Morgan Stanley Inst Discovery Port

  • exp 0.74% Aum 5.3b
  • Performance VERY VERY HOT from Mar'20 lows from 20k to 70k (relative)
  • Howver like ARK funds, money is flowing out of the hottest names in Q1'2021.

  • M*5 3yr 1 rank, 5yr 1 rnk, 10yr 2 rank

  • MGT GREAT: Dennis Lynch’s Counterpoint Global team helped make it a great success as he has led the team for 21 years and works with 14+ team.

IT will close to most new investors on April 5, 2021 after a hot streak and rush of assets. The fund earned the top spot in the mid-growth Morningstar Category for the trailing year through February 2021 with a 153% gain. It had $2.1 billion in net inflows in 2020, boosting its overall strategy size to $8.1 billion as of December.

The fund has closed in the past, most recently reopening in 2017. Its sibling, small-cap option Morgan Stanley Institutional Inception, will also close to new investors. Both will remain available to new investors in certain cases via retirement or benefit plans, clients of RIAs who use the funds in asset-allocation portfolios, and Morgan Stanley employees and affiliates.

Baron Funds - leaders in Midcap Growth

  • Carrying high Expense ratios of 1.3%

BPTRX Baron Partners Fund - exp 1.3% 3yr 2 rank, 5yr 1 rnk, 10yr 1 rank

BFGFX Baron Focused Growth Fund - exp 1.35% 3yr 3 rank, 5yr 2 rnk, 10yr 5 rank


manager Andrew Peck - Exp 1.3% The fund isn’t cheap. Its 1.30% expense ratio is well above the 1.02% levied by its average peer. - 1yr +22%, 3yr 20%, 5yr 13%

LBFIX ClearBridge Select Fund - exp 1.1% 3yr 6 rank, 5yr 6 rnk, 10yr x rank

DFCIX Delaware Smid Cap Growth Fund - exp 1.1% 3yr 4 rank, 3yr 6rnk, 10yr x rank


NEXTX Shelton Green Alpha Fund

SGFFX Sparrow Growth Fund

PHSKX Virtus KAR Mid-Cap Growth Fund

WFDDX Wells Fargo Discovery Fund

ADNIX American Beacon ARK Transfmt Innov Fd - rank 3 - 3yr only

SDSCX BNY Mellon Sm/Md Cp Gr Fd

## T. Rowe Price Funds

PRNHX T. Rowe Price New Horizons Fund

RPMGX T. Rowe Price Mid-Cap Growth Fund

  • aims for long-term capital appreciation. The fund invests majority of assets in a diversified portfolio of common stocks of mid-cap companies whose earnings T. Rowe Price expects to grow at a faster rate than the average company
  • 150 holdings
  • 3yr returned 11.7% over the past three years.


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