Mid-Cap Indexing in Australia

S&P Dow Jones Indices    Michael Orzano, CFA, Senior Director, Global Equity Indices, S&P DJI, John Welling, Associate Director, Equity Indices, S&P DJI
16 Sep 2018
Categories: Industry/Sector Analysis, Fundamental Analysis, Financial Analysis, Investment Management, Investor Education, Equity Investments

Country or region: Australia

Summary:
The mid-cap space has often been described as the “sweet spot” of equity investing—and with good reason. Mid caps tend to offer a balance between the high growth (and high risk) offered by small caps and the stability (but slower growth) of large caps. In addition, the Australian midcap segment has a more diverse sector representation than both large-cap and broad-market Australian benchmarks, which are dominated by banks. Over the long term, these unique characteristics have helped the Australian mid-cap segment outperform all other size categories on both an absolute and risk-adjusted basis.

Despite these characteristics, the mid-cap segment of the Australian stock market is often overlooked and underappreciated. Pure mid-cap investing is not common, and often, mid- and small-cap companies are lumped together for investment purposes, diluting the unique characteristics of midsized companies. 


Reference URL: https://spindices.com/documents/research/research-mid-cap-indexing-in-australia.pdf



Abstract

The mid-cap space has often been described as the “sweet spot” of equity investing—and with good reason.  Mid caps  tend to offer a balance between the high growth (and high risk) offered by small caps and the stability (but slower growth) of large caps. In addition, the Australian midcap segment has a more diverse sector representation than both large-cap and broad-market Australian benchmarks, which are dominated by banks. Over the long term, these unique characteristics have helped the Australian mid-cap segment outperform all other size categories on both an absolute and risk-adjusted basis.

Despite these characteristics, the mid-cap segment of the Australian stock market is often overlooked and underappreciated. Pure mid-cap investing is not common, and often, mid- and small-cap companies are lumped together for investment purposes, diluting the unique characteristics of midsized companies. 



Date of original publication:

08/31/2018


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