QUESTION: Jason asks the difference between mid-cap growth and mid-cap value in his mutual fund.
ANSWER: For purposes of allocating, mid-cap is a middle-sized company. It generally falls in the growth stock mutual fund category. We recommend you spread your mutual funds across four types: growth, growth and income, aggressive growth, and international. For purposes of those four areas, this is the growth category, and either of them is fine.
Investing in a mid-cap value fund is like buying an expensive home but in a good neighborhood. It’s okay that you paid a little more because the neighborhood’s good, and you’re just going to wait it out. It’s a value mentality versus bargain hunting. I’m probably going to go with the one with the best track record because the differences are so minute.