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Mid-Cap Funds for Your Large-Cap Portfolio

Make sure your mid-cap fund isn't creeping up the market-cap ladder.

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While mid-blend funds often get overlooked, they're a pretty good idea in principle. Most investors' stock portfolios are anchored in large-caps, so a swath of mid-caps can serve as a nice complement. But while it might seem that the mid-blend category would be a happy hunting ground for a balanced mix of mid-cap growth and value stocks, there are some caveats.

Many of the funds in the mid-blend category are actually more go-anywhere or go-everywhere funds than dedicated mid-cap vehicles. Pairing a nondedicated mid-blend fund with a large-cap fund could very well lead to a bigger chunk of large-caps than you want, so a bit of care is needed when selecting a fund from this group.

One simple, effective approach to the problem is to simply buy an index fund.  Vanguard Mid-Capitalization Index (VIMSX) is a virtual no-brainer, although the shop's decision to switch the bogy from S&P Midcap 400 index to the MSCI U.S. Mid-Cap 450 index does make it a less-perfect match with their  Vanguard 500 (VFINX) index fund. Still, it's very well-run and quite cheap. If you do decide to go with a passively-managed option, watch costs:  ProFunds Mid Cap (MDPIX) has a confiscatory 1.69% expense ratio.

Todd Trubey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.