4 Top-Performing Mid-Cap Growth Funds

Smaller companies often undergo faster growth than more mature firms, but they can also add volatility to a portfolio. To find the top-performing mid-cap growth funds, we looked for those with the best returns over the last one-, three-, and five-year periods. Four funds made it through the screen.

Mid-Cap Growth Funds Performance

• Fidelity Mid Cap Growth Index Fund FMDGX
• iShares Russell Mid-Cap Growth ETF IWP
• PrimeCap Odyssey Aggressive Growth Fund POAGX
• Vanguard Mid-Cap Growth Index Fund VOT

Over the last 12 months, the mid-cap growth category returned 11.13%. On an annualized rate, these funds have returned 16.79% over the last three years and 6.48% over the last five. That compares with the Morningstar US Market Index, which has returned 15.75% over the last 12 months, 23.29% per year over the last three years, and 14.56% per year over the last five years.

What Are Mid-Cap Growth Funds?

Some growth portfolios invest in stocks of all sizes, leading to a mid-cap profile, but others focus on mid-size companies. Mid-cap growth portfolios target US firms that are projected to grow faster than other mid-cap stocks, and therefore command relatively higher prices. The US mid-cap range typically falls between $1 billion and $8 billion, and it represents 20% of the total capitalization of the US equity market. Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price ratios and low dividend yields).

Screening for the Top-Performing Mid-Cap Growth Funds

We looked at returns data from the past one, three, and five years using data in Morningstar Direct. We screened for open-ended and exchange-traded funds in the top 25% 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 four 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.

Fidelity Mid Cap Growth Index Fund

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

The $3.5 billion fund has climbed 17.87% over the past 12 months, outperforming the average fund in its category, which rose 11.13%. The Fidelity fund, launched in July 2019, has climbed 22.05% over the past three years and 9.52% over the past five.

iShares Russell Mid-Cap Growth ETF

• Morningstar Medalist Rating: Bronze
• Morningstar Rating: ★★★★

The $20.8 billion fund has climbed 17.71% over the past 12 months, outperforming the average fund in its category, which rose 11.13%. The iShares fund, launched in July 2001, has climbed 21.87% over the past three years and 9.34% over the past five.

“The fund tracks the Russell Midcap Growth Index, which captures the faster-growing side of the mid-cap market. This fund doesn’t venture as far toward the growth end of the Morningstar Style Box as many peers. It still effectively represents the opportunity set available to active managers in the category. Most holdings fall into the consumer cyclical, industrial, and technology sectors, accounting for almost two-thirds of the portfolio.

“Market cap weighting and generous index rules around size constraints push the fund up the market-cap ladder while minimizing stock-specific risk. The average constituent has a market cap of about $29 billion, about $4 billion larger than the average category peer. Larger stocks can help contain volatility.

“The fund’s performance advantage relative to the category was pronounced over the 10 years through 2024. It outperformed the average category peer by 1.56 percentage points annualized with comparable volatility, translating into a risk-adjusted return advantage as well.”

—Zachary Evens, analyst

PrimeCap Odyssey Aggressive Growth Fund

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

Over the past 12 months, this $6.6 billion fund has gained 22.00%, while the average fund in its category is up 11.13%. The PRIMECAP fund, launched in November 2004, has climbed 21.99% over the past three years and 9.76% over the past five.

“Primecap Odyssey Aggressive Growth continues to benefit from its outstanding investment team and low fees. But flaws in the investment team’s sell discipline warrant a downgrade of the strategy’s Process Pillar rating to Above Average from High.

“The firm is also unique for its extreme patience. It often holds stocks for a decade or more, a rare trait that can pay off when it backs firms with competitive moats, rising earnings, or skilled leadership. Top holding Eli Lilly is a case in point. A long-term orientation also works when a company suffers a steep share-price drop, but its troubles are fixable and fleeting.

“But patience has been a double-edged sword for Primecap, whose convictions have sometimes hardened into obstinacy, even as investment theses flopped. Corporate executives can prove themselves poor stewards, rivals sometimes erode once-mighty franchises, companies’ sales slide, debt piles up, or a bargain-basement takeover ends the growth story Primecap was banking on.

“Mistakes like these explain much of the firm’s lackluster returns over the past five years. It has also faced some stylistic headwinds, with a contrarian bent that has lagged in a market enthralled by momentum. Even so, the firm’s longer-term track record is admirable, helped by its research-focused culture and competitive pricing of its funds. For investors seeking a differentiated approach to growth investing, this fund remains a worthy holding.”

—Robby Greengold, principal

Vanguard Mid-Cap Growth Index Fund

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

Over the past 12 months, the $33.1 billion Vanguard Mid-Cap Growth Index Fund rose 17.60%, while the average fund in its category rose 11.13%. The Vanguard fund, launched in August 2006, has climbed 20.17% over the past three years and 9.44% over the past five.

“The fund tracks the CRSP US Mid Cap Growth Index, which captures the faster-growing side of the mid-cap market. Investor sentiment around their superior growth prospects tends to drive the high valuations of these stocks. These valuations represent the market’s consensus opinion, but they may not always be justified, making this a relatively volatile market segment. While mid-cap stocks constitute most of the fund, larger stocks are also present, which should help temper volatility.

“The portfolio’s sector complexion largely resembles the Morningstar Category, with a handful of differences. Like most peers, technology stocks take center stage, but they receive even more attention here. The portfolio allocates nearly 30% to the sector versus the typical peer’s 27%. Real estate stocks also receive a higher weighting (6.6%) than the norm (2.5%)—an unexpected difference, since these stocks tend to fall closer to the value side of the Morningstar Style Box. To offset these overweight sector positions, the fund underweights financials, healthcare, and cyclical stocks.

“Buffer rules around the fund’s size constraints coupled with market-cap-weighting allow it to capitalize on strong performance in its largest stocks. Index fund peers without these rules may be forced to sell the stocks sooner, realizing less of their gain. Generous buffer rules let them grow with fewer restrictions, and market-cap-weighting gives them greater prominence. The fund outpaced its average peer by 74 basis points annualized since it started following its current benchmark in April 2013 through November 2024.”

—Zachary Evens