Mid-Cap ETFs: Navigating Tariffs and Economic Uncertainty

Mid-Cap ETFs Performance and Outlook

• 💡 While mid-cap ETFs have struggled at the start of 2025, they are generally composed of stocks with market capitalizations between $1 billion and $10 billion.
• 📈 Historically, mid-cap stocks have outperformed large and small caps over the three years following a market downturn, such as the recent ~10% drop in the S&P 500.
• ⚠️ A subdued start to 2025 for mid-caps is partly attributed to interest rates remaining at higher levels, with the US 10-year Treasury around 4.25%.

Advantages of Mid-Cap Companies

• 🎯 Mid-cap companies tend to derive more revenue domestically within the United States, making them better equipped to handle tariffs and geopolitical uncertainties compared to large-cap firms with global revenue streams.
• 🧠 They are considered more nimble than large-cap companies, yet larger and more stable with better management teams than small-cap firms, allowing them to navigate economic policies more effectively.

Investment Strategy for Mid-Cap Funds

• 🔍 Argent Capital Management employs a bottom-up stock selection process, seeking companies with growing cash flows, a durable competitive advantage (a "moat"), and strong management.
• 📊 An overweight in a particular sector, such as industrials in Argent's AMID fund, is an artifact of this process, not a top-down sector view.
• 💰 The focus is on identifying enduring businesses that demonstrate consistent financial health and strategic stability.