Close this search box.

Table of Contents

Mid-Cap Fund


A Mid-Cap Fund refers to a type of investment fund that primarily invests in mid-sized companies; these companies fall between small and large capitalization firms, usually having a market capitalization between $2 billion and $10 billion. These funds hold stocks from companies expected to experience higher growth compared to large-cap due to their smaller size, yet still provide more potential stability than small-cap firms. Investors usually consider mid-cap funds a moderate risk investment that offers a balance between the growth potential and risk.


The phonetics of the keyword “Mid-Cap Fund” is “mid-kap fuhnd”.

Key Takeaways

Sure, here it is:“`html

  1. Mid-Cap Funds primarily invest in companies with medium market capitalization. These funds are considered to offer a balance between risk and return as they have the potential to offer higher returns than the large-cap funds and lower risk than small-cap funds.
  2. Unlike large-cap funds which invest in matured companies, mid-cap funds invest in emerging or next-generation companies, hence these funds may offer significant growth potential over the long term. However, they also come with greater volatility and risk compared to large-cap funds.
  3. Investment in mid-cap funds is suitable for investors with a higher risk appetite and a longer investment horizon. It is generally recommended to hold mid-cap funds for a time horizon of at least 5-7 years to fully realize their growth potential.



The concept of a Mid-Cap Fund is crucial in business and finance as it refers to a type of investment fund that focuses on companies with a medium market capitalization—typically between $2 billion and $10 billion. These types of funds are important because they offer a balance between the growth potential of smaller companies and the stability of larger companies. Mid-cap funds often provide higher growth potential than large-cap funds while reducing the risks associated with investing in smaller, more volatile businesses. Thus, for investors wanting both growth and stability in their portfolio, mid-cap funds can serve as an attractive option. They also add to portfolio diversification, which can further mitigate risk.


A Mid-Cap Fund serves a unique purpose in the investment portfolio by bridging the gap between large-cap funds that cater to established, stable companies and small-cap funds which target startups and smaller, often nimbler companies. The core purpose of a Mid-Cap fund is to offer investors a balanced mix of growth and stability. This can, in turn, provide an optimal blend of risk and return. Mid-cap companies are generally recognized as firms that are in their growing phase, potentially offering substantial growth prospects. They are typically characterized by a market capitalization ranging from $2 billion to $10 billion.Investors prefer mid-cap funds for several reasons. Mainly, these funds provide an opportunity for diversification, distributing risk across a broader range of companies than a simple large-cap or small-cap investment. They are used for seeking capital appreciation over the long term and can be used by investors to balance a portfolio, given their blend of growth and income. Because of the blend of risk and reward that mid-cap funds offer, they might also be a preferred choice for investors who want to avoid the volatility of small-cap funds but still desire higher returns than most large-cap funds generally offer.


1. The T. Rowe Price Mid-Cap Growth Fund: This is a real-world example of a Mid-Cap Fund because it focuses on investing in mid-size companies that show potential for above-average earnings growth. The fund has consistently delivered favorable returns.2. The Vanguard Mid-Cap Index Fund: As an example of a Mid-Cap Fund, this ETF seeks to track the performance of the CRSP US Mid Cap Index, which is a benchmark for mid-size U.S. corporations. The Vanguard Mid-Cap ETF is renowned for its low expense ratio and broad exposure to mid-sized companies.3. The Fidelity Mid-Cap Stock Fund: This actively managed fund generally invests at least 80% of assets in mid-cap stocks that fall within the range of the Russell Midcap Index. The Fidelity Mid-Cap Stock Fund uses fundamental analysis to select its stock portfolio, making it a real-world example of a Mid-Cap Fund.

Frequently Asked Questions(FAQ)

What is a Mid-Cap Fund?

A Mid-Cap Fund is a type of mutual fund that invests primarily in mid-sized companies. These companies are typically defined as firms with a market cap between $2 billion and $10 billion.

How does a Mid-Cap Fund work?

A Mid-Cap fund works by gathering investments from multiple investors and uses these collected funds to buy stocks in mid-cap companies. The aim is to provide investors with an investment growth potential from these mid-cap companies.

What is the risk associated with Mid-Cap Funds?

While mid-cap funds offer potential for substantial growth, they also come with a higher level of risk than large-cap funds. This is due primarily to their exposure to the volatility often experienced by smaller, less established companies.

How can a Mid-Cap Fund benefit my portfolio?

Mid-Cap Funds can add diversification to an investor’s portfolio. They often offer a good balance between the high growth potential of small-cap stocks and the stability and consistency of large-cap stocks.

What should I consider before investing in Mid-Cap Funds?

Before investing in Mid-Cap Funds, you should take into account your risk tolerance, investment horizon, and financial goals. Consult with a financial advisor to determine if Mid-Cap Funds align with your investment strategy.

Can I lose money in a Mid-Cap Fund?

Yes, like any investment, there is the risk of losing money when you invest in a Mid-Cap Fund. It is essential to understand the risk before you invest.

Can I use Mid-Cap Funds for long-term investing?

Yes, Mid-Cap Funds can be suitable for long-term investment strategies, especially for investors seeking growth potential. However, the investor should be prepared to tolerate short-term volatility.

How can I start investing in Mid-Cap Funds?

You can start investing in Mid-Cap Funds by opening an account with a brokerage that offers these types of investments. Afterward, you can choose a Mid-Cap Fund to invest in, based on your investment objectives and risk tolerance.

Related Finance Terms

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More