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Vangard VMGIX midcap fund
Old 11-11-2015, 01:45 AM   #1
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Vangard VMGIX midcap fund

I took a significant position (for me) in VMGIX a year ago and it was mirroring the SP500 until recently. It has now lagged during the recent recovery. I understand I am comparing mid to large caps but I am trying to find out why the mid cap is not recovering.

I can't find a forum or message board to learn more about this. Does anyone have any insight into this?

Thanks
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Old 11-11-2015, 05:50 AM   #2
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Midcap index has more REITs than S&P500 index?
I also believe mid and small companies could be more susceptible to interest rate fears.
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Old 11-11-2015, 08:29 AM   #3
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Quote:
Originally Posted by Cantwaitanylonger View Post
I took a significant position (for me) in VMGIX a year ago and it was mirroring the SP500 until recently. It has now lagged during the recent recovery. I understand I am comparing mid to large caps but I am trying to find out why the mid cap is not recovering.

I can't find a forum or message board to learn more about this. Does anyone have any insight into this?

Thanks
I don't expect a mid-cap fund to mirror the S&P500. I use them to diversify against the mostly large cap companies in the S&P 500. Some years mid-cap stocks outperform large-cap. Other years it's reversed.
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Old 11-11-2015, 02:27 PM   #4
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I do understand that they are different. I am just looking for some reason as to why they are underperforming or where I can learn more.
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Old 11-11-2015, 02:34 PM   #5
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I do understand that they are different. I am just looking for some reason as to why they are underperforming or where I can learn more.
Some years mid-caps underperform large caps. Other years they out perform. There really is no other "reason".

Because of this, some folks like to keep their portfolio diversified cross different capitalizations - including small cap. Small cap stocks tend to outperform large cap stocks over very long periods of time, but they are more volatile. I guess mid-caps fall in the middle.
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Old 11-11-2015, 04:40 PM   #6
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Search Google for small mid large cap difference. I spotted a pdf in the top results from Morningstar. On my phone at the moment.
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Old 11-11-2015, 04:56 PM   #7
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I also noticed that much broader small cap/mid cap index underperformed S&P 500. (Index of few 1000 companies)

You have narrow Mid Cap growth that consists of only 180 companies. The narrower number of companies the more you can underperform or outperform broad index like S&P 500.

I am actually adding to mid cap/small cap in my 401k exactly for a reason that they are lagging S&P. Add to dogs
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Old 11-11-2015, 07:38 PM   #8
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I do understand that they are different. I am just looking for some reason as to why they are underperforming or where I can learn more.
I'm sure you could find lots of explanations that sound good in retrospect. If you can find one that tells you in advance let me know and I'll spilt the profits with you .

Seriously though. I think the answer is no one knows why and thus no one knows what happens next.

I personally do believe there is a tendency for mean reversion so if it underperfoms for a while it's likely to outperform "sooner or later" and I think that's one of the reasons people who fiddle with their investments buy high and sell low

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Old 11-11-2015, 09:14 PM   #9
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OK. I kind of figured that. Thanks for the replies. The fund has done really well. I will be patient.....and maybe increase my position. I might be getting just a little greedy in my old age.
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Old 11-12-2015, 07:49 AM   #10
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OK. I kind of figured that. Thanks for the replies. The fund has done really well. I will be patient.....and maybe increase my position. I might be getting just a little greedy in my old age.

There is longer term data here that may impart some understanding:

https://www.fidelity.com/learning-ce...owth-investing
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Old 11-12-2015, 09:58 AM   #11
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Current Bull market is over 6 years old. Large cap stocks tend to perform better than mid-cap and small-cap stocks in the later part of the bull market. Here's a link that explains business cycles:

How to Invest in a Bull Market: 8 Steps (with Pictures) - wikiHow

Happy investing!
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Old 11-13-2015, 03:22 AM   #12
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Mid caps - Look at your specific growth sectors - My speculation is that the ETF is

1. Light on technology. That's what has really lead the Oct and Nov rally.
.
2. Also light on financials.

3. Heavier weighting toward Oil and Oil services / energy stocks, holding

4. Holds higher interest rate sensitive MLP's, utilities and real estate investment trusts.
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Old 11-13-2015, 06:49 AM   #13
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My investing philosophy during the accumulation years was to look at the quarterly statements, sell the best performer and buy the worst. My 401k had LC growth and value, MC growth and value as well as SC growth and value. It worked out extremely well for me , although it did test my sanity and nerves at times.
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