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Mid-cap Growth vs. Mid-cap Value

Dave Ramsey - January 18, 2010

What's the difference between mid-cap growth and mid-cap value?

Dear Dave,

I'm looking at allocations for my mutual funds. What's the difference between mid-cap growth and mid-cap value?

Jason

Dear Jason,

For purposes of allocating, a mid-cap is a medium-sized company. Generally, these fall into the growth stock mutual fund category. Try thinking of value funds this way: Let's say you buy an expensive home in a good neighborhood. It's okay that you paid a little more, because it's a good area, and you're just going to wait things out. It's that kind of value mentality versus bargain hunting and trying to get a great deal.

When it comes right down to it, the differences in the two types are small. I'd go with whichever one has the best track record and rate of return. Regardless, always remember to spread your money across these four types of mutual funds: growth, growth and income, aggressive growth, and international.

-Dave

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