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Mutual Fund Spotlight: BNY Mellon MidCap Index Fund [PESPX]


By: Ted Black, CFP©
Winter 2020 (Vol. 37, No. 4)

"Don't keep all your eggs in one basket." This is a saying that we've all heard and actually makes quite a bit of sense in the world of investing, where we call it diversification. The idea is to hold several different types of investments in select proportions in an effort to create a portfolio that best reflects your individual need/desire to balance capital preservation with long-term growth.

In your search for high quality no-load mutual funds that meet your particular investment needs, the BNY Mellon MidCap Index Fund (PESPX) may be worth a look. As its name implies, this fund is an index fund that tracks the S&P MidCap 400® Index, a somewhat lesser known sibling to the widely followed S&P 500® Index.

What’s Cap? Cap is short for “market capitalization”, which is a measurement of the value of all of a company’s outstanding stock. If a company has 1 million shares of stock outstanding currently worth $100 per share, it would have a market capitalization of $100 million. This fund defines the Mid Cap category as market capitalizations of roughly $1 billion to $4.5 billion.

On balance, the vast majority of stocks are highly correlated, meaning that if there’s a bull market, most stocks go up, and if there’s a bear market, most stocks go down. However, they clearly don’t all move in lockstep. Mid Cap stocks have a different risk/reward profile than either Large Cap or Small Cap stocks, and are recognized as a separate asset class by the investment community.

One can never tell what the future holds, but this fund boasts a solid long-term performance record. Being an index fund, it also carries a reasonably low expense ratio. In many cases, a well diversified portfolio will hold Large Cap, Mid Cap and Small Cap stock funds. If your portfolio is without a quality Mid Cap holding, perhaps this fund is worth your consideration.

If you questions about Asset Allocation or Rebalancing and how they may currently apply to your situation, please feel free to call Ted Black, CFP® at 888-878-0001, extension 3.

Performance annualized and updated through 12/31/2019: 1-Year: +25.56%; 3-Year: +8.73%; 5-Year: +8.52%. The gross annual expense ratio is 0.50%.

Statistics and information provided by Morningstar and BNY Mellon. Please visit the Dreyfus website at www.bnymellon.com for the most recent performance information. The principal value and investment return will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns shown, unless otherwise indicated, are total returns, including any capital gains or losses and all dividend and capital gains distributions. The performance data quoted represents past performance and in no way guarantees future results. Mutual funds are not FDIC insured.

Mutual funds are sold by prospectus. An investor should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. Please go to www.bnymellon.com or contact our office at 888-878-0001 to obtain a prospectus. Please read the prospectus carefully before you invest or send money. Advisory services offered through Royal Palm Investment Advisors, Inc., a Registered Investment Advisor.


Advisory services offered through Royal Palm Investment Advisors, Inc., a Registered Investment Advisor.