Why I'm Buying This ETF Like There's No Tomorrow, and Never Selling

• A well-rounded portfolio should see stocks from antithetic industries and sizes.

• Mid-cap stocks are mostly the saccharine spot betwixt stableness and risk.

• Mid-cap stocks thin to outperform during early-to-mid stages of economical expansion.

• 10 stocks we similar amended than Vanguard Index Funds - Vanguard Mid-Cap ETF ›

When I put successful exchange-traded funds (ETFs), I mostly mean to clasp them for the agelong haul. I usage the aforesaid thought process erstwhile investing successful idiosyncratic stocks, but changing manufacture landscapes oregon company-specific setbacks tin marque jumping vessel a amended enactment than staying connected a sinking boat. With wide ETFs, that's not usually a concern, due to the fact that galore companies are doing the dense lifting.

One banal that has been a staple successful my portfolio is the Vanguard Mid-Cap ETF (NYSEMKT: VO). The main crushed I proceed to bargain VO with nary volition of selling is that I judge a genuinely well-rounded portfolio should see companies of each sizes, due to the fact that each has its ain advantages.

There volition inevitably beryllium volatility careless of what benignant of banal you're investing in, but 1 of the advantages of investing successful large-cap stocks is the comparative stableness that comes with them. These companies are often well-established manufacture leaders and person the fiscal resources to upwind astir economical storms.

The selling constituent of investing successful small-cap stocks is the maturation opportunities they connection owed to their comparatively tiny size. With this maturation accidental comes other hazard due to the fact that their operations are much delicate to the broader environment. But again, that's the trade-off you make.

Mid-cap stocks are the saccharine spot betwixt the two. These companies are mostly ample capable to person proven concern models and accordant currency flow, yet they're tiny capable that determination are inactive plentifulness of maturation opportunities disposable to them if they determine to grow into caller markets versus continuing to run successful a lucrative niche.

Since VO's January 2004 inception, its returns person astir mirrored the S&P 500's (SNPINDEX: ^GSPC), up 488% compared to the S&P 500's 490%. Over the past decade, the S&P 500 has noticeably outperformed VO, mostly owed to the maturation successful megacap stocks, but that hasn't made maine wantonness my regular VO investments.

My absorption isn't connected chasing gains; it's astir keeping a diversified portfolio that allows maine to payment from antithetic economical environments. In the lawsuit of mid-cap stocks and VO, they thin to outperform the marketplace during periods of aboriginal to-mid economical expansion.