5 Top-Ranked Mid-Cap ETFs For Outperformance

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The stock market has been witnessing volatility of late triggered by surging bond yields, which has made investors jittery. It has sparked fears of overvaluation especially in the high growth sector like technology, which has seen a huge surge during the pandemic.

However, encouraging updates on COVID-19 vaccines development, rapid vaccinations, as well as fiscal stimulus, raised hopes of a swift economic recovery. With Johnson & Johnson (JNJ - Free Report) becoming the third authorized COVID-19 vaccine candidate in the United States, President Joe Biden expects to have enough vaccines for all adults by the end of May.

On the stimulus front, the U.S. House of Representatives last weekend passed a $1.9 trillion stimulus package, namely the American Rescue Plan Act of 2021. The package will now move to the Senate for further consideration. The twin news has buoyed the economic outlook, thereby bolstering investors’ risk appetite.

Further, the latest upbeat data-infused confidence into the economy. Notably, U.S. manufacturing activity increased to a three-year high in February amid acceleration in new orders. U.S. construction spending surged to a record high in January, boosted by strong private and public outlays while consumer spending rose the most in seven months in January, indicating that the economy is growing faster than expected. The combination of factors will result in increased industrial and manufacturing activity as well as a pickup in consumer demand. Strong corporate earnings, as well as signs of a healing labor market, also bode well for economic growth and the stock market.

Against such a backdrop, investors seeking to capitalize on the bullish fundamentals but worried about rising yields should consider mid-cap stocks in the basket form. In fact, the mid-cap space has been outperforming over the past month. The ultra-popular ETF, iShares Core S&P Mid-Cap ETF (IJH - Free Report), tracking the mid-cap stocks has gained 4.7% in the same time frame compared to growth of 1.3% for SPDR S&P 500 ETF (SPY - Free Report) and 3.8% for the small cap iShares Russell 2000 ETF (IWM - Free Report).

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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