The base asset in many portfolios is large-cap U.S. equity. However, mid-cap U.S. equity is almost always included when advisors and investors assemble diversified portfolios. One way to see if this popularity is justified is to do an in-depth survey of mid-cap funds, and to see how these funds affect portfolio performance.

Using Morningstar Principia as the source of data for this study, there were 387 mid-cap U.S. equity funds (mutual funds and exchange-traded funds) in existence as of Nov. 30, 2011. This total included funds classified in the following Morningstar categories: mid-cap value, mid-cap blend, mid-cap growth, communications, consumer cyclical, consumer defensive, equity energy, financial, health, industrials, natural resources, real estate, technology and utilities.

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