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Mid-Cap Investing

Mid-cap stocks may be under-allocated in many portfolios, but the case for mid-cap investing is compelling. Mid-cap companies are typically small-cap companies that have succeeded and may be in a position to benefit from enhanced access to the capital markets. Compared to large-cap companies, mid-caps are often in the growth phase of the business life cycle where they may be experiencing higher cash flows and earnings growth rates.

Mid-Caps Are Often Overlooked by Investors

Mid-cap companies are uniquely positioned between small, developing companies and large, mature companies, but are often overlooked by investors. There is potential to miss out on a major portion of the market by not participating in the mid-cap arena. While mid-cap stocks represent approximately 24% of the market capitalization of the U.S. equity market,1 investors are significantly underweight the group with only 11% exposure.2

Diversification across market capitalizations manifests its importance over time. (Bear in mind, diversification won’t ensure gains or guarantee against losses.) Mid-cap stocks tend to be under-researched by Wall Street analysts. The prices of stocks with less analyst coverage may not fully reflect all relevant company data and may be mispriced.

Gaps in research coverage can create opportunities for portfolio managers and analysts to identify and exploit the information inefficiencies of promising mid-cap companies that are experiencing significant growth.

1 Source: The Frank Russell Company as of 12/31/2021
2 Source: Morningstar Direct as of 12/31/2021

The Mid-Cap Difference

Mid-cap stocks, as measured by the Russell Midcap® Index, have outperformed both large and small caps over the past 42 years.

Growth of a Hypothetical $10,000 Investment

Measured by Index Performance

January 1, 1979 - December 31, 2021

Source: Zephyr StyleADVISOR®. Performance data quoted represents past performance,
which is no guarantee of future results. Investing in an index is not possible.

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How Mid-Caps May Fit a Portfolio

Mid-cap stocks, as measured by the Russell Midcap® Index, have outperformed both large-and small-caps since 1979. Mid-caps generally have outperformed because they have seen both cash flow and earnings per share accelerate, especially compared to large caps. At the same time, investing in stocks of mid-cap companies may be subject to more erratic market movements than stocks of larger, more established companies. By not participating in the mid-cap space, investors are potentially missing out on a major portion of the market.
IMPORTANT DISCLOSURES
The Fund invests in equities which are subject to market volatility and loss. The Fund invests in stocks of mid-cap companies which may be subject to more erratic market movements than stocks of larger, more established companies. Current and future portfolio holdings are subject to risk. The advisor engages the sub-advisor to manage the Fund's portfolio; the sub-advisor's judgment may impact the Fund's performance.

Explore Touchstone's Actively Managed Mid-Cap Funds

Touchstone Mid Cap Fund
Touchstone Mid Cap Growth Fund
Touchstone Mid Cap Value Fund

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Consider Touchstone’s Actively Managed Mid-Cap Funds

Touchstone’s actively managed mid-cap funds provide access to an asset class that is uniquely positioned and often overlooked by investors.

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Market Measures:

Russell 2000® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000® Index is a subset of the Russell 3000® Index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership.

Russell Top 200® Index measures the performance of the largest cap segment of the U.S. equity universe. The Russell Top 200® Index is a subset of the Russell 3000® Index. It includes approximately 200 of the largest securities based on a combination of their market cap and current index membership.

Russell Midcap® Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap® Index is a subset of the Russell 1000® Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.

Standard & Poor’s 500 Index consists of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

Russell Indexes: The Frank Russell Company (FRC) is the source and owner of the data contained or reflected in this material and all trademarks and copyrights related thereto. The material may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. This is a Touchstone Investments presentation of the data, and FRC is not responsible for the formatting or configuration of this material or for any inaccuracy in the presentation thereof.

Risk Measures: Sharpe Ratio is a measure used to determine a portfolio’s reward per unit of risk. It is calculated by dividing annualized excess returns by annualized Standard Deviation.

Please consider the investment objectives, risks, charges and expenses of the fund carefully before investing. The prospectus and the summary prospectus contain this and other information about the fund. To obtain a prospectus or a summary prospectus, contact your financial advisor or download and/or request one at Resources & Tools. Please read the prospectus and/or summary prospectus carefully before investing.

Investment return and principal value of an investment in a Fund will fluctuate so that investor's shares, when redeemed, may be worth more or less than their original cost. All investing involves risk.

Touchstone Funds are distributed by Touchstone Securities, Inc., a registered broker-dealer and member FINRA/SIPC.

Investment products offered are not FDIC insured, may lose value and have no bank guarantee.