Source Capital, Inc. (SOR) is the only CEF I have found that is specifically aimed at mid-cap growth equities. It has been around since 1968 with management that has been in place for almost a decade. The management team is Eric S. Ende, Steven R. Geist and Gregory A. Herr.
There are a number of ETFs that focus on mid-cap growth, the iShares Russell Midcap Growth ETF (IWP), the iShares S&P MidCap 400 ETF (IJK) and the Vanguard Mid-Cap Growth ETF (VOT) are the largest ones. How does SOR stack up?
Data from Morningstar (5/15)
SORs price total returns over ten years trail IJK and IWP
The Mid Cap Growth style ranks ninth out of the twelve fund styles as detailed in my Style Rankings for ETFs and Mutual Funds report. It gets my Dangerous rating, which is based on aggregation of ratings of 10 ETFs and 375 mutual funds in the Mid Cap Growth style as of April 17, 2014. Prior reports on the best & worst ETFs and mutual funds in every sector and style are here.
Figure 1 ranks from best to worst the eight mid-cap growth ETFs that meet our liquidity standards and Figure 2 shows the five best and worst-rated mid-cap growth mutual funds. Not all Mid Cap Growth style ETFs and mutual funds are created the same. The number of holdings varies widely (from 23 to 579), which creates drastically different investment implications and ratings. The best ETFs and mutual funds allocate more value to Attractive-or-better-rated stocks than
Paul Merriman concludes that "rebalancing could be a huge mistake." Perhaps, although it could also turn out to be a huge benefit. Then again, it's more likely that rebalancing's effects will fall somewhere between those two extremes for most portfolios. In any case, Merriman's focus is sensible, even if his conclusion is extreme. You just can't spend too much time thinking about rebalancing. Even if you decide to shun it completely, which Merriman comes close to advocating for equity strategies, your rebalancing choices are likely to be critical factors for driving portfolio results through time.
The glitch, of course, is that the optimal rebalancing strategy is unknown in real time. We know what would have worked had you applied it rigorously in the past. But it's never really clear how the rear-view mirror will inform our analysis going forward. In my book Dynamic Asset Allocation, I reviewed a