3 Top-Performing Mid-Cap Blend Funds

Investing in mid-cap stocks can provide an opportunity to find lesser-known companies, but can also pose additional risks for investors. These funds are among the best options for investors looking to get into mid-cap investing, according to Morningstar analysts.

To screen for the top-performing funds in this category, we looked for those with the best returns over the last one-, three-, and five-year periods. All names that passed the screen were actively managed.

• T. Rowe Price Integrated US Small-Mid Cap Core Equity Fund TQSIX
• Vanguard Strategic Equity Fund VSEQX
• Vanguard US Momentum Factor ETF VFMO

Mid-Cap Blend Funds Performance

Over the last 12 months, the mid-cap blend category returned 9.36%. On an annualized rate, these funds have returned 15.45% over the last three years and 11.63% over the last five. Meanwhile, the Morningstar US Market Index has returned 18.96% over the last 12 months, 24.19% per year over the last three years, and 15.32% per year over the last five years.

What Are Mid-Cap Blend Funds?

The typical mid-cap blend portfolio invests in US stocks of various sizes and styles, giving it a middle-of-the-road profile. Most shy away from high-priced growth stocks but aren’t so price-conscious that they land in value territory. The US mid-cap range for market capitalization typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the US equity market. The blend style is assigned to portfolios where neither growth nor value characteristics predominate.

Screening for the Top-Performing Mid-Cap Blend Funds

We looked at returns data from the past one, three, and five years using Morningstar Direct. We screened for open-ended and exchange-traded funds in the top 33% of the category using their lowest-cost primary share classes for those periods. We also filtered for funds with a Morningstar Medalist Rating of Bronze, Silver, or Gold. We excluded funds with assets under $100 million and analyst coverage that was not 100%. This left three investments.

Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. In addition, Medalist Ratings may differ among the share classes of a fund.

T. Rowe Price Integrated US Small-Mid Cap Core Equity Fund

• Morningstar Medalist Rating: Silver
• Morningstar Rating: ★★★★

This $926.3 million fund has climbed 11.77% over the past year, outperforming the average fund in its category, which rose 9.36%. The fund, launched in February 2016, has climbed 18.88% over the past three years and 14.06% over the past five.

“This strategy blends quantitative and qualitative investment signals. Lead manager David Corris believes that combining human and quantitative stock ratings leads to better outcomes, as the inclusion of human ratings helps moderate some risks with quantitative investing. Typically, quant models are backward-looking, so there is a risk that they do not capture relevant forward-looking information that the market already ingested. By including T. Rowe Price’s analyst stock ratings model, the hope is that these potential blind spots get uncovered. Still, the quant model plays a major role, and ideally, Corris and comanager Prashant Jeyaganesh want to own stocks that are rated highly by both the quant model and T. Rowe’s well-regarded analyst team. In the small- and mid-cap universe, not every stock is covered by a human analyst, so stocks can often be selected solely on their quantitative merits.

“This fund is stuck between categories, as it sits on the small- and mid-cap border and typically holds smaller-cap fare than rivals. As such, its Russell 2500 prospectus benchmark is probably the best bogy for investors gauging its success. Under Jeyaganesh’s tenure from June 2017 through January 2025, it comfortably topped both that benchmark and its typical category peer.”

—Jack Shannon, principal

Vanguard Strategic Equity Fund

• Morningstar Medalist Rating: Gold
• Morningstar Rating: ★★★★

This $9.6 billion fund has climbed 14.54% over the past year, outperforming the average fund in its category, which rose 9.36%. The fund, launched in August 1995, has climbed 19.28% over the past three years and 15.72% over the past five.

“Portfolio manager Cesar Orosco took the helm in February 2021 and patiently but firmly reshaped the approach here to pursue its historical philosophy. He heads the seven-member active equity team that runs this strategy and others; they sit within Vanguard’s Quantitative Equity Group, or QEG. Orosco arrived at Vanguard after 10 years as a quant at AJO. Orosco partnered with other Vanguard teams, got the firm’s full buy-in on using artificial intelligence, and tweaked his team’s workloads to emphasize their interests and skills.

“Orosco prudently waited to dramatically change the strategy’s systematic model for a year while studying it to develop and test potential enhancements. Still, small initial changes were meaningful: The stock count increased to about 530 from roughly 350; a sixth quantitative factor set, using short interest to provide defense, joined the preexisting mix of earnings growth, quality, management decisions, momentum, and valuation. But the crucial change came in February 2023 when the team launched its machine-learning artificial intelligence engine. It runs parallel to the traditional quant model on the same six themes but adjusts dynamically and rapidly to changing market conditions. As it nears the two-year mark, it has performed according to plan in various environments, earning the Process rating upgrade to Above Average.

“Stellar returns since Orosco’s arrival and since the AI model went live suggest a sharp turn from subpar returns when he landed. From Feb. 27, 2021, through Nov. 30, 2024, Vanguard Strategic Equity gained an annualized 10.5%, trouncing the Russell Midcap index’s 7.1% return and the typical mid-cap blend Morningstar Category peer’s 7.5% mark. Its prospectus benchmark, the MSCI US Small + Mid Cap 2200, gained just 6.0% over that stretch. Since the AI engine went live in February 2023 through November 2024, the fund outpaced its prospectus benchmark and typical peer by nearly 6 percentage points cumulatively.”

—Todd Trubey, senior analyst

Vanguard US Momentum Factor ETF

• Morningstar Medalist Rating: Silver
• Morningstar Rating: ★★★★★

Over the past year, this $1.2 billion fund has gained 22.94%, while the average fund in its category is up 9.36%. The Vanguard fund, launched in February 2018, has climbed 22.43% over the past three years and 15.65% over the past five.

“This fund avoids stock-specific risks, a common drawback in rival momentum strategies. Pulling stocks from the complete market and weighting them by momentum breeds a portfolio ranging from 500 to 750 holdings, the top 10 of which have never exceeded 15% of the portfolio. This breadth ensures that momentum drives returns—not individual company bets.

“Despite its deep roster, this fund looks quite different than the broad market and Russell Midcap Index, its Morningstar Category benchmark. Just 24% of its portfolio overlapped with the Russell 3000, the index it draws stocks from, midway through 2024. Pronounced momentum exposure requires differentiation, but that can spark volatile benchmark-relative returns. Investors should exercise patience to reap this fund’s rewards.”

—Ryan Jackson, senior analyst