

Q: Why have midsize stocks been such strong performers since 1990?

A: Investors often pay most attention to the big companies and the small ones. But it turns out the midsize ones have been generating the best returns.

The Standard & Poor's Midcap 400 index has soared 926% since 1990, says Winans Investments, which doesn't even include dividends. That's a head-turning performance next to the 331% gain of the large-cap heavy S&P 500 since that time. And the midsize stocks have even trounced the 450% gain by small companies, measured by Russell 2000.

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To some investors, midsize companies are in the perfect position to be small enough to be nimble and adapt, but at the same time, big enough to capitalize on global markets, Winans says.

Midcaps haven't just been standouts with performance, but also with stability. The S&P Midcap 400 index has never had a back-to-back negative year since 1990, Winans says. The S&P 500, however, has suffered consecutive annual losses 9% of the time since 1990. And in years that the S&P 500 declines, the S&P Midcap 400 does better 57% of the time.

Longer-term academic studies have shown that small-cap stocks have been the standout after adjusting for risk. But lately, midcap investors are enjoying their gains.