Mid-Cap Growth Investing

Downloaded 14SEP2011 from www.mtbia.com/communications/CMO_V45.pdf

The capitalization of the U.S. equity investment universe, as represented by the Russell 3000® Index, is approximately:

  • 9% small-cap companies with capitalizations under $2 billion;
  • 21% mid-cap companies with capitalizations between $2 billion and $10 billion;
  • 70% large-cap companies with capitalizations above $10 billion.

Executive Summary

  • Mid-cap equities have historically had superior risk-adjusted returns relative to other domestic equity asset classes
  • While both growth and value mid-cap stocks offer attractive opportunities, we believe the case for mid-cap growth is particularly compelling
  • Our research shows that the mid-cap equity universe has an abundance of mid-life cycle, financially sound, high growth companies, with the potential to sustain earnings growth over time
  • Many investors do not treat mid-cap equities as a distinct asset class and therefore underutilize a high-potential area of the equity market
  • Investors should consider style when choosing either active or passive management, as empirical evidence suggests that active management can add value within growth investing
  • Within the mid-cap growth space, sufficient dispersion exists in the performance of active managers to suggest to us that good manager selection has the potential to enhance investor returns