Mid-cap blend funds offer investors a chance to invest in growing companies with less risk than small-cap funds and earlier growth potential than large-cap funds. Four funds stand out for their strong performance over one, three, and five years. Two of these are from Vanguard, highlighting their strength in this category.
Top Mid-Cap Blend Funds:
- Vanguard Strategic Equity Fund (VSEQX)
- Vanguard US Momentum Factor ETF (VFMO)
- WisdomTree US Multifactor Fund (USMF)
- Xtrackers Russell US Multifactor ETF (DEUS)
In the past year, mid-cap blend funds returned 9.21%. Over three years, their annualized return was 9.18%, and over five years, 11.30%. By comparison, the Morningstar US Market Index returned 14.03% in the last year, 15.68% annually over three years, and 14.54% annually over five years.
What Are Mid-Cap Blend Funds?
These funds invest in U.S. stocks with market values between $1 billion and $8 billion. They combine growth and value stocks without focusing heavily on either style. Mid-cap stocks make up about 20% of the U.S. equity market.
How Were the Top Funds Selected?
Using Morningstar Direct data, funds in the top third of returns over one, three, and five years were chosen. Only funds with Morningstar Bronze, Silver, or Gold ratings and at least $100 million in assets were included. This process identified four top funds.
Fund Highlights
Vanguard Strategic Equity Fund (Gold rating) gained 11.09% last year, beating the category average of 9.21%. Managed by Cesar Orosco since 2021, the fund uses a mix of quantitative factors and a machine-learning AI engine introduced in 2023. This approach adapts quickly to market changes and has helped the fund deliver steady performance.
Vanguard US Momentum Factor ETF (Silver rating) returned 14.10% last year, outperforming the category average. The fund invests in stocks with strong momentum across all market caps, holding 500 to 750 stocks to reduce company-specific risk. Its strategy has shown consistent results, though investors should be patient during volatile periods.
These funds provide a balanced way to invest in mid-sized companies with a blend of growth and value, backed by strong management and innovative strategies.
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