The midcap exchange-traded funds (ETFs) are composed mostly of equity securities of companies the market cap varies between $2 billion and $10 billion. The name suggests that middle cap firms have a higher market cap but lower than large caps. The main benefit midcaps provide investors is that they are likely to grow and boost profit margins, market share, and efficiency. An ETF specifically geared towards midcap companies offers investors the chance to have broad exposure to companies within the growth range. Midcap stocks represented through the S&P MidCap 400 Index have performed poorly compared to the general U.S. equity markets over the past 12 months. The total return was 25.5 percent compared to the S&P 500's overall return of 28.9 percent at the time of December 10, 2021.

iShares Core S&P Mid-Cap ETF (IJH)

It has a $63.5 billion net asset and focuses on the mid-cap market. The fund's management team aims to offer investors an efficient and low-cost method to increase exposure to U.S. Mid-cap companies. The fund is composed of 403 shares and has expenses of 0.05 percent. The fund offers the highest trailing yield of 1.26% over 12 months of 1.26 percent. Based on our list of five top holdings, the fund has a little more exposure to manufacturing and materials than other funds focused on mid-caps.

Vanguard Mid-Cap ETF (VO)

It has net assets of $53.2 billion. It has an expense rate of 0.04 percent, which is a bit lower than what is found in the IJH ETF. The fund aims to offer investors affordable access to U.S. mid-cap ETF. It is composed of 370 stocks and has a 1.26 percent dividend yield. In the case of the 5 top positions listed below, investors should expect to get slightly more exposure to certain sectors such as information technology and healthcare.

Nuveen ESG Mid-Cap Growth ETF

It is a fund that concentrates on medium-sized companies likely to grow at a faster rate than other businesses. Additionally, the fund is also focused on Environmental, Social, and Governance (ESG) investing. The ESG investment strategy of the fund could have advantages and disadvantages. Some believe that ESG investing can cause investors to overlook significant companies that don't fulfill ESG requirements, while others think that ESG investing could outperform the overall market.

The fund has performed fairly in the last three years, earning 22.18 percent, compared to the index's 22.99 percent. It also has an acceptable cost-to-income ratio of 0.40 percent or $4 for every $1000 put into it. However, the fund has $355.1 million invested in the account, which isn't overwhelming.6 Due to this, some investors might worry about liquidity if they have to sell their shares.

WisdomTree U.S. Mid-Cap Dividend Fund

It is an ETF that focuses on mid-sized companies, which also pay dividends. While dividends are usually an attribute of large-cap businesses, many medium-sized businesses have dividends. Investors looking for exposure to that market segment while also earning an income from their portfolios will benefit from this fund. It comes with a sensible cost-to-income ratio of 0.38 percent, equivalent to $3.80 for every $1000 invested. The fund also has around $3.0 billion of assets under management. This means that investors don't need to be concerned regarding liquidity when they wish to sell or buy shares.

Pros

Offer a balance of stability and potential growth Investors typically use market caps to indicate stability and potential growth. Large caps are less likely to grow in potential, yet they are steady. Small caps can be volatile but can increase. Mid-caps provide investors with the option of a middle ground. Diversification may reduce the risk of mid-cap firms: Mid-sized businesses are typically more prone to failure than larger corporations and blue-chip. ETFs allow you to diversify your investments across thousands or hundreds of companies, which reduces the risk to your portfolio should one fail.

Cons

More unstable than large caps: companies with Large-caps have more experience than mid-caps and tend to be more firm. Large caps are usually better suited to weather economic recessions and have less price fluctuation. If you invest in mid-caps, it could be a time to wait until periods of extreme volatility are over before making an income, which might not be appealing to certain investors. Mid-cap companies are less liquid than large-cap companies. There are fewer shares for trading, making it more difficult for fund managers to purchase and sell shares when needed to manage their portfolios.