Mid-Caps Quietly Shine as VO Breaks Into Top 10

Mid-cap stocks don’t usually grab the spotlight. They’re often overshadowed by the headline-grabbing large-caps or the high-risk, high-reward appeal of small-caps. But in 2025, mid-caps are having a moment.

The Vanguard Mid-Cap ETF (VO) recently cracked the top 10 for ETF inflows this year, pulling in $6.3 billion in new money, according to FactSet. That brings its assets under management to $81 billion, making VO one of the largest and most widely held mid-cap ETFs on the market.

What Exactly Are Mid-Caps?

Mid-caps are companies that fall between large- and small-caps in terms of market size, but how that’s defined depends on the index provider.

VO tracks the CRSP U.S. Mid Cap Index, which includes companies between the 70th and 85th percentile of the investable U.S. equity market. That means VO tends to hold larger mid-caps—many of which are considered large-caps by other index providers. 

In contrast, the iShares Core S&P Mid-Cap ETF (IJH)—the largest mid-cap ETF with $93 billion in assets—tracks the S&P MidCap 400 Index, which targets companies between the 85th and 93rd percentile of the market, or roughly those with market caps between $7.4 billion and $20.5 billion.

In practice, this means VO and IJH hold very different portfolios. Our analysis shows just seven overlapping stocks between the two funds out of more than 400 holdings in IJH and 300 in VO.

Surprisingly, there’s much more overlap between VO and large-cap funds like the SPDR S&P 500 ETF Trust (SPY). Despite being labeled a mid-cap fund, VO shares 257 tickers with SPY (the S&P 500 tracks companies in the 0th to 85th percentile of market cap).

VO Performance Divergence

This difference in construction has driven a sharp divergence in returns this year. VO is up 4% year to date, while IJH is down 0.7%. For context, SPY is up 1.5%, and the iShares Russell 2000 ETF (IWM), which tracks small-caps, is down 4.8%. 

VO’s edge comes from its heavier exposure to larger companies. IJH, with its focus on smaller mid-caps, has lagged in the current environment. And small-caps have fared even worse.

Over longer time frames, the picture changes: Over the past five years, IJH is up 98%, VO is up 92% and SPY is up 116%. Then, the story reverses again over the past 10 years: VO is up 144%, IJH has gained 133% and SPY is up 231%.

Why Mid-Caps Matter

Even if they don’t dominate financial news, mid-caps can play an important role in portfolio construction. 

In an era where investors are increasingly concerned about concentration risk in mega-cap stocks, mid-cap ETFs offer a way to tilt portfolios away from the handful of giant companies that dominate most broad market indices. 

VO tilts toward the larger end of mid-caps, overlapping with SPY.  IJH, on the other hand, focuses on smaller mid-caps with little to no overlap with the S&P 500.