BAJAJ BROKING
June 19, 2025
2 mins read
Mid-cap indexes represent the segment of the equity market composed of companies with medium-sized market capitalisations. These indexes are positioned between small-cap and large-cap indexes, offering a view of firms that have moved beyond the early stages of development but are not yet considered industry giants. The companies included in mid-cap indexes typically have market capitalisations that fall within a defined range, although this range may vary slightly between index providers.
These indexes are used to track the performance of mid-sized companies and can offer insight into this segment’s contribution to broader market trends. Investors and analysts use mid-cap indexes to understand how these firms perform relative to the overall market or to specific sectors. Because mid-cap companies may have more established operations than small-cap firms, their stock prices may reflect a blend of growth and operational maturity. However, they may still encounter business hurdles that can affect stability.
Two frequently referenced mid-cap indexes are the S&P 400 and the Russell Midcap. While both focus on medium-cap companies, they are constructed using different methodologies and selection criteria, which leads to differences in their constituents and performance profiles. These distinctions influence how each index behaves under different market conditions and provide investors with varied options depending on their investment approach or preference for specific sectors or weightings.
Overall, mid-cap indexes play a distinct role in representing an important segment of the equity landscape, offering insights into the companies that exist between the extremes of size and scale.
A mid-cap company is typically defined by its market capitalisation, which generally falls between $2 billion and $10 billion. This classification places mid-cap firms in the middle range between small-cap and large-cap companies. The designation is not static and may shift over time due to market conditions, stock price movements, or company-specific developments. Market capitalisation is calculated by multiplying a company’s share price by its total number of outstanding shares, and it serves as a broad measure of a company’s size and value in the public markets.
Mid-cap companies often represent businesses that have progressed beyond the early stages of growth. Many have established operations, developed customer bases, and built a level of brand recognition. They may also have more consistent revenue streams and operational structures compared to smaller companies. Despite these features, mid-cap firms generally do not have the extensive resources or wide market reach that large-cap companies possess.
Investors often view mid-cap stocks as offering a blend of growth potential and relative stability. These companies may still be expanding into new markets or product segments, which can support future growth. However, they may also be susceptible to market competition, economic shifts, or internal challenges that could affect performance.
Common traits of mid-cap companies include:
Many are in active phases of development and expansion.
Their risk profile typically lies between small and large-cap firms.
Some may eventually transition into large-cap status depending on performance and market dynamics.
This combination of characteristics makes mid-cap companies a distinct segment in investment analysis.
Several indexes track mid-cap companies to reflect the performance of medium-sized businesses in the stock market. These indexes are often used as benchmarks by investors and fund managers. While the S&P 400 and Russell Midcap are among the better-known indexes, others focus on specific sectors or investment strategies. Below is a comparison of key mid-cap indexes and their characteristics:
Index | Market Cap Range | Key Features | Constituents |
S&P MidCap 400 | $2 billion to $10 billion | Represents U.S.-based companies across different sectors. Selection is based on financial viability, market cap, and liquidity. | Comprises 400 companies showing consistent financial performance and sector representation. |
Russell Midcap | $2 billion to $10 billion | Drawn from the bottom 800 stocks of the Russell 1000 Index, offering broader exposure. Focuses on companies with mid-range market caps. | Includes around 800 mid-cap companies from a range of industries and sectors. |
NASDAQ US Mid Cap Index | $1.5 billion to $10 billion | Based on companies listed on the NASDAQ with mid-level capitalisation. Includes sector-agnostic selections. | Reflects companies listed on NASDAQ, often used by ETFs and passive funds. |
MSCI US Mid Cap 450 Index | $2 billion to $10 billion | Designed to track U.S. mid-cap stocks from various industries. Selection criteria include size, liquidity, and representation. | Covers 450 mid-sized companies across industries, regularly reviewed and adjusted. |
Dow Jones U.S. Mid-Cap Total Stock Market Index | $2 billion to $10 billion | Measures the performance of mid-cap U.S. equity securities. Broader in scope than some other indexes. | Holds a varied group of U.S. mid-cap stocks, aiming to represent the middle spectrum. |
FTSE US Mid Cap Index | $1.5 billion to $10 billion | Derived from the FTSE USA Index. Companies are selected based on market capitalisation and liquidity. | Includes U.S. mid-cap stocks from different sectors, reviewed quarterly. |
Each index uses a unique methodology to select and weight its constituents. Some focus on broader inclusion, while others follow stricter criteria. These indexes provide exposure to a diverse set of companies and are often used in constructing exchange-traded funds (ETFs) and other investment products targeting the mid-cap segment.
Mid-cap indexes use different approaches to select and maintain their list of companies. The S&P 400 and the Russell Midcap are two widely followed benchmarks, but they apply distinct methodologies that affect their composition and coverage. Below is a side-by-side comparison highlighting how each index is constructed and the characteristics of their constituents.
Criteria | S&P MidCap 400 | Russell Midcap Index |
Selection Approach | Committee-based selection involving qualitative and quantitative factors. | Rule-based selection derived from the Russell 1000 Index. |
Market Capitalisation | Typically ranges from $2 billion to $10 billion, based on periodic reviews. | Covers the 201st to 1000th largest companies in the Russell 1000 Index. |
Number of Constituents | Includes 400 companies across various sectors. | Comprises approximately 800 mid-cap companies. |
Liquidity Requirement | Must meet minimum trading volume and liquidity thresholds. | Companies must meet set liquidity screens based on average daily trading volume. |
Profitability Criteria | Companies must show positive earnings in the most recent quarter and over the past year. | Profitability is not a requirement for inclusion. |
Rebalancing Frequency | Rebalanced quarterly, with changes decided by the index committee. | Reconstituted annually in June, with quarterly reviews for minor adjustments. |
Sector Representation | Ensures balanced representation of U.S. sectors. | Reflects market-based sector weightings based on the underlying companies. |
Inclusion/Exclusion | Companies can be added or removed based on committee judgment and market changes. | Inclusion and removal are determined by predefined rules and company rankings. |
Geographic Focus | U.S.-listed companies with a primary business presence in the U.S. | U.S.-based companies included in the Russell 1000 Index. |
Weighting Methodology | Market-cap weighted, adjusted for free float. | Market-cap weighted, no float adjustment. |
Both indexes aim to represent mid-cap equities but differ in structure and methodology. The S&P 400 takes a curated approach involving financial performance and sector representation, while the Russell Midcap focuses on a broader, rules-based inclusion from a larger universe of companies. These differences lead to varying sector weights and performance trends across the two indexes.
Evaluating the historical performance of mid-cap indexes helps provide context on how these benchmarks have responded to market movements over time. Although past returns cannot guarantee future outcomes, such data can support a more informed understanding of potential patterns and index behaviour under different economic conditions.
The S&P MidCap 400 has shown relatively steady returns over the years, particularly in periods of economic expansion. This index includes companies that tend to be more stable compared to smaller-cap firms, and its historical performance reflects moderate growth across multiple business cycles. It generally moves in line with the broader U.S. equity market, with occasional deviations based on sectoral exposure or index rebalancing.
The Russell Midcap Index, on the other hand, tracks a broader selection of companies. Due to its larger number of constituents and wider sector coverage, this index may capture more mid-sized firms that are in earlier stages of their business development. This broader approach has, at times, resulted in higher historical returns compared to the S&P 400, particularly during bull markets or when smaller mid-cap firms experience market tailwinds.
Differences in returns between the two indexes are also influenced by their methodologies and rebalancing criteria. The S&P 400’s committee-based approach may result in a more stable selection of companies, while the Russell Midcap’s rule-based method includes a wider array of firms that may respond differently to economic shifts.
Overall, while both indexes have delivered consistent long-term returns, their differences in structure and selection criteria can lead to varying levels of exposure to market trends and risks over time.
Investing in mid-cap indexes can be done through exchange-traded funds (ETFs) and mutual funds. These instruments are designed to replicate the performance of indexes such as the S&P 400 and the Russell Midcap. Below are key points to consider when investing through these vehicles:
Both ETFs and mutual funds tracking mid-cap indexes generally offer a broad mix of companies across different sectors.
ETFs often carry lower expense ratios compared to actively managed mutual funds. However, mutual funds may offer features like automatic reinvestment and systematic investment plans.
ETFs are bought and sold on stock exchanges like individual shares, allowing real-time pricing. Mutual funds are typically traded once per day at the closing net asset value (NAV).
Many of these funds aim to mirror the returns of specific mid-cap indexes. Their holdings are adjusted periodically to align with the index composition.
Mid-cap index funds may help balance a portfolio that is heavily weighted toward either large-cap or small-cap stocks.
These funds are widely available through brokers and investment platforms. They can be accessed through both lump sum and systematic investment methods.
Mutual funds may have a minimum investment threshold, while ETFs can be bought in single units depending on market price.
Most ETFs disclose their holdings daily, while mutual funds may do so less frequently.
ETFs tend to be more tax-efficient due to their structure, which limits capital gains distributions.
Mid-cap funds carry a level of risk that lies between small-cap and large-cap investments, influenced by market volatility and sector exposure.
Investing in mid-cap stocks involves certain risks and factors that investors should take into account. These companies may present a mix of growth and risk characteristics, requiring a balanced approach. Key considerations include:
Mid-cap stocks can be more sensitive to broader market movements compared to large-cap stocks. This may result in greater price fluctuations during periods of uncertainty.
Some mid-cap stocks may trade with lower volume, which can affect the ability to buy or sell shares without influencing the price significantly.
Mid-cap companies may have limited resources to withstand prolonged economic downturns, making them more exposed to cyclical trends or sector-specific challenges.
These firms may still be in the process of establishing consistent cash flows and market position, which can add to operational risk.
Certain mid-cap indexes may have higher exposure to specific sectors, depending on index methodology
Selecting the appropriate mid-cap index for your investment portfolio involves a careful process dependent on your personal financial objectives, tolerance for risk, and investment horizon. Mid-cap indexes provide investment in firms that are typically in the midst of growth, providing an attractive choice for investors wishing to share in the expansion of businesses with some diversification benefit.
The S&P 400 is a widely tracked index that chooses mid-cap companies on the basis of certain criteria like market capitalisation, liquidity, and sector balance. It gives a focused view of mid-sized firms that have achieved certain inclusion criteria. This could appeal to investors who want a more filtered choice of companies in the mid-cap segment.
On the other hand, the Russell Midcap index captures a wider segment of mid-sized companies across various sectors. With a larger number of constituents, it reflects a broader picture of the mid-cap market, which may be appealing to investors looking to diversify across industries and business models.
Beyond the structure of each index, it is also important to understand how these indexes align with your investment expectations. Sector exposure is one factor that can influence the behaviour of an index, as different industries respond differently to economic changes. Similarly, the historical return patterns and reaction to market cycles can provide some insight into the level of risk involved.
Liquidity is another practical consideration, especially when investing through mutual funds or exchange-traded funds (ETFs) that track these indexes. The ability to enter or exit positions efficiently can impact overall portfolio flexibility.
Choosing between mid-cap indexes is not only about comparing returns but also about finding a structure that complements your broader financial strategy. A balanced review of each index's approach, composition, and behaviour can support better-informed investment decisions.
In conclusion, mid-cap indexes such as the S&P 400 and the Russell Midcap offer a balanced opportunity for investors seeking exposure to companies with growth potential while managing moderate risks. Both indexes track medium-sized companies, but they differ in their selection criteria and market representation. The S&P 400 focuses on a more curated group of mid-cap stocks, primarily in the U.S., while the Russell Midcap encompasses a broader range of sectors and includes a larger number of companies.
Investors need to go through careful examination of the methodologies of these indexes, their personal financial goals and risk appetite. Mid-cap stock performance is subject to change with market conditions, and diversification of the index may help in avoiding risks. Investors can pick the mid-cap index that suits their best investment approach by examining factors like the sectors covered, volatility level, and the overall risk-return profile.
Finally, selecting the appropriate mid-cap index is a matter of grasping the trade-off between opportunities for growth and risk. With the right research and planning, mid-cap investing can be a useful addition to a diversified portfolio.
Share this article: 
No Data Found
A mid-cap index tracks the performance of medium-sized companies with market capitalizations typically ranging between $2 billion and $10 billion.
The S&P 400 focuses on leading U.S.-based companies, while the Russell Midcap offers broader exposure, including 800 companies from various sectors.
Mid-cap indexes provide exposure to companies with growth potential, offering investors a balance between small-cap volatility and large-cap stability.
Bajaj Broking offers access to ETFs and mutual funds that track mid-cap indexes like the S&P 400 and Russell Midcap.
Mid-cap investments carry risks such as market volatility, lower liquidity, and sensitivity to economic cycles.
Disclaimer :
The information on this website is provided on "AS IS" basis. Bajaj Broking (BFSL) does not warrant the accuracy of the information given herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or suitability for any particular purpose. While BFSL strives to ensure accuracy, it does not guarantee the completeness, reliability, or timeliness of the information. Users are advised to independently verify details and stay updated with any changes.
The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.
Neither the information, nor any opinion contained in this website constitutes a solicitation or offer by BFSL or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.
BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.
Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For more disclaimer, check here : https://www.bajajbroking.in/disclaimer
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
Please Enter Mobile Number
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
TRENDING CALCULATORS AND STOCKS ON BAJAJ BROKING
POPULAR STOCKS: Tata Motors Share Price Infosys Share Price IRFC Share Price SBI Card Share Price Cipla Share Price NBCC Share Price IDFC First Bank Share Price IRCTC Share Price PNB Share Price Vodafone Idea Share Price Axis Bank Share Price JSW Steel Share Price Bandhan Bank Share Price SBI Share Price Tata Steel Share Price ONGC Share Price Ashok Leyland Share Price Paytm Share Price Subex Share Price DLF Share Price Reliance Share Price HDFC Bank Share Price Suzlon Share Price IOC Share Price HUL Share Price Asian Paints Share Price Bank Of Baroda Share Price ITC Share Price TCS Share Price HFCL Share Price Icici Bank Share Price Tata Chemicals Share Price CDSI Share Price MRF Share Price Tata Power Share Price Adani Green share price BPCL Share Price Vedanta Share Price Dmart Share Price Hindalco Share Price LIC Share Price SAIL Share Price Adani Port Share Price IEX Share Price Nalco Share Price L&T Share Price Adani Power Share Price BHEL Share Price Bajaj Finance Share Price Canara Bank Share Price Indusind Bank Share Price Gail Share Price Yes Bank Share Price Wipro Share Price Happiest Minds Share Price Coal India Share Price Maruti Share Price Reliance Power Share Price
INDIAN INDICES: Nifty 50 Share Price SENSEX Share Price Nifty Next 50 Share Price BSE100 Share Price Nifty Bank Share Price LRGCAP Share Price Nifty 100 Share Price MIDCAP Share Price Nifty 200 Share Price SMLCAP Share Price Nifty 500 Share Price BSE500 Share Price Nifty Midcap 50 Share Price ALLCAP Share Price NIFTY SMLCAP 50 Share Price BSE200 Share Price India VIX Share Price BSEIPO Share Price
