Given the market’s current growth narrative, investors may want to consider broadening out their equity exposure beyond traditional large caps. In particular, midcaps could provide a particularly interesting investment opportunity. Traditionally, midcap ETFs offer more growth potential than large-caps while being exposed to less volatility than small-caps.
In the January edition of “The BEAT”, the Eaton Vance team examined how midcap equities may perform in the new year. Notably, the outlook piece cited a few particular reasons why midcaps could offer a path forward for equity investors. One such factor focused on how midcaps may be an ideal choice for investors looking to branch out their stock exposure.
“With our base case soft landing view intact, we continue to believe that the rally in U.S. equity markets will eventually broaden beyond a narrow set of names, as the non-mega cap segments have greater scope for earnings growth and an expansion in valuations,” the Eaton Vance team noted.
These benefits extend beyond U.S. market expectations, as well. The Eaton Vance piece notes that midcaps may offer less exposure to global volatility than mega-cap alternatives. In particular, the Eaton Vance team notes that foreign revenue accounts for about a quarter of the S&P 400 Mid Cap index. This stands in sharp contrast to the Mag 7, which derive 49% of their total revenues from foreign sources.
Access CVMC's Responsible Midcap Portfolio
As such, advisors and traders alike can tap into disciplined midcap strategies to access a wider variety of perks. One cost-efficient means to do so is through a fund like the Calvert US Mid-Cap Core Responsible Index ETF (CVMC ).
With a net expense ratio of 15 basis points, CVMC offers a low-cost strategy that taps into midcaps with responsible business practices. Companies with responsible business practices may be able to operate more efficiently while delivering shareholder-focused value.
Even before midcaps became more positioned for results, CVMC has been offering compelling long-term returns. As of January 24th, 2025, the fund’s NAV has risen over 19% over the last twelve months.
For more news, information, and analysis, visit The ETF Yield Channel.
