Finding the middle ground: mid-cap blend funds may help you hedge your bets as the economy recovers.A fair number of market experts will tell You that middle-sized companies offer a unique opportunity under most market conditions. For one, they often go under appreciated by large brokerage firms until they report dazzling profit news. This means that a well-run mid cap is often poised for the same potential for large gains that investors find in small companies. Additionally, mid-caps tend to be more established than small-caps, and therefore less likely to undergo extreme volatility when the market drops. Compare this year's results with numbers tainted taint v. taint·ed, taint·ing, taints v.tr. 1. To affect with or as if with a disease. 2. To affect with decay or putrefaction; spoil. See Synonyms at contaminate. 3. by the bear market. As of the end of the third quarter 2003, large corporations tracked by the S&P 500 Index had averaged a 14.7% gain. The S&P Small-Cap Small-cap A stock with a small capitalization, meaning a total equity value of less than $500 million. small-cap 1. Of or relating to the common stock of a relatively small firm having little equity and few shares of common stock Index logged a 20,9% gain over the same nine months, and the S&P MidCap mid·cap adj. 1. Or or relating to corporations whose retained earnings and outstanding shares of common stock have a value between those of small cap companies and large cap corporations. 2. benchmark wasn't was·n't Contraction of was not. wasn't was not wasn't be far behind with a 19.8% tally. Over the last three years through Oct. 6, including the bear market, large-cap Large-cap A stock with a high level of capitalization, usually at least $5 billion market value. large-cap 1. Of or relating to the common stock of a big corporation that has considerable retained earnings and a large amount of shares retreated ah average 9.46% annually, mid caps slid 6.49%, and small-caps averaged ah annual gain of 1.35%. As you look at opportunities for this Year, you may want to hedge your bets with a mid cap blend fund Blend Fund A mutual fund composed of various asset classes (such as stocks, bonds and money market securities), allowing investors to diversify their holdings by owning just a single fund. Also called "hybrid funds". , a category that the mutual fund research company Morningstar says incorporates a mix of growth and value investing Value Investing The strategy of selecting stocks that trade for less than their intrinsic value. Value investors actively seek stocks of companies with sound financial statements that they believe the market has undervalued. styles. As of Oct. 10, 2003, mid-cap Mid-cap Short for "Middle Cap," mid cap refers to stocks with a market capitalization of between $2 billion to $10 billion. Notes: As the name implies, a mid-cap is in the middle of the pack. A mid-cap isn't too big, but at the same time has a relatively decent market cap. blends were up 26%, thanks in part to a strong rally by technology stocks. Morningstar analyst, Dan McNeela says, "Coming into a rally, smaller-cap stocks tend to do well. But the best reason to get interested in [mid-cap blend funds], however, is [because it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have ] a way to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. a large cap heavy portfolio." We screened Morningstar's database looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. portfolios with the strongest record over the last three years, en indication of how well a fund can perform under rough market conditions. The fund that finished atop our list was the Hussman Strategic Growth Fund, which provided investors a 19.7% average annual return over the three year period ending Oct. 6, 2003. The fund's management often applies hedge fund hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" strategies to investing and have taken sizeable stakes in healthcare and consumer companies. As of this writing, the Hussman fund carried a five star rating from Morningstar, but the portfolios expense ratio was a high 1.99%, and its turnover rate was 199%. The Ariel Ariel, in astronomy Ariel (âr`ēəl), in astronomy, one of the moons, or natural satellites, of Uranus. Ariel, in the Bible Ariel (ā`rēĕl) Appreciation Fund also makes our list. Managed by John Bogers, the Ariel fund boasts a five-star ranking and has had a 12.2% average annual total return over the last three years. Over time, Rogers has aimed to snatch up Verb 1. snatch up - to grasp hastily or eagerly; "Before I could stop him the dog snatched the ham bone" snatch, snap clutch, prehend, seize - take hold of; grab; "The sales clerk quickly seized the money on the counter"; "She clutched her purse"; "The stocks selling at 40% or more to his calculation of their company's value. His portfolio tends to stock up on financial and consumer companies while carrying a light weighting in technology shares. The Ariel fund posted an impressive 22.4% return for the first nine months of 2003. The fund has a 13% turnover rate and an expense ratio of 1.26%.
Top Mid-Cap Blend Funds
1-Year Ann
Fund Name (Ticker) Total Return *
Hussman Strategic Growth (HSGFX) 15.85%
Icon Leisure & Consumer Staples (CLEX) 20.65
Eagle Growth (EGRWX) 24.33
Kinetics Paradigm (WWNPX) 38.08
IMS Capital Value (IMSCX) 58.49
FMI Common Stock [FMIMX) 26.16
Ariel Appreciation (CAAPX) 34.18
3-Year Ann.
Fund Name (Ticker) Total Return *
Hussman Strategic Growth (HSGFX) 19.73%
Icon Leisure & Consumer Staples (CLEX) 13.46
Eagle Growth (EGRWX) 13.23
Kinetics Paradigm (WWNPX) 13.08
IMS Capital Value (IMSCX) 12.70
FMI Common Stock [FMIMX) 12.32
Ariel Appreciation (CAAPX) 12.24
5-Year Ann.
Fund Name (Ticker) Total Return *
Hussman Strategic Growth (HSGFX) N/A
Icon Leisure & Consumer Staples (CLEX) 11.83
Eagle Growth (EGRWX) 10.38
Kinetics Paradigm (WWNPX) N/A
IMS Capital Value (IMSCX) 16.13
FMI Common Stock [FMIMX) 14.96
Ariel Appreciation (CAAPX) 13.42
Toll-Free
Fund Name (Ticker) Number
Hussman Strategic Growth (HSGFX) 800-487-7626
Icon Leisure & Consumer Staples (CLEX) 800-764-0442
Eagle Growth (EGRWX) 800-749-9933
Kinetics Paradigm (WWNPX) 800-930-3828
IMS Capital Value (IMSCX) 800-934-5550
FMI Common Stock [FMIMX) 800-811-5311
Ariel Appreciation (CAAPX) 800-292-1435
Minimum
Fund Name (Ticker) Initial Investment
Hussman Strategic Growth (HSGFX) $1,000
Icon Leisure & Consumer Staples (CLEX) 1,000
Eagle Growth (EGRWX) 500
Kinetics Paradigm (WWNPX) 2,500
IMS Capital Value (IMSCX) 5,000
FMI Common Stock [FMIMX) 1,000
Ariel Appreciation (CAAPX) 1,000
* AS OF OCTOBER 6, 2003. SOURCE: MORNINGSTAR INC.
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