Midcaps Are Where the Action Is


You hear most investors talking about the security of large caps or the growth potential of small caps in an inflationary environment, but you rarely hear people gush about midcaps... and that's great, says Brian Lazorishak of Chase Investment Council.

Gregg Early: I’m here with Brian Lazorishak, who is portfolio manager of the 4 Star Chase Mid Cap Growth Fund (CHAMX).

Brian, there is a lot of talk in the markets about buying large-cap stocks for safety. And, in a highly inflationary environment, which people are talking about because of quantitative easing and the cheap dollar, small caps are the way to go. Now, you make the case for midcaps, and I think that it’s an important case to make, so I’d love to hear it.

Brian Lazorishak: We’ve liked midcaps as an asset class compared to large and small caps for some time. Obviously, we’re speaking to our own style a little bit there.

But the numbers really back this up: from a longer-term standpoint, they offer a pretty good risk-reward tradeoff. If you look at the ten, 20, 30 years ended 2011, midcaps have actually outperformed both large and small caps in terms of absolute return, with a risk profile somewhere between the two.

They're not necessarily the best absolute performer, but we think you get some of the benefits of small cap investing without as much risk as you see in small caps, both at an overall portfolio and individual company level.

Gregg Early: They’re kind of like the Goldilocks stocks, right?