S&P Midcap Trading Strategy (S&P 400 Index) — What Is It?

Last Updated on July 30, 2022 by Oddmund Groette

Stock indexes are widely used as benchmarks for tracking a basket of stocks within a particular sector or segment of the market. Investors use the indexes to assess the overall health of the sector and compare the performance of their own holdings

The S&P 400 index is a stock index that tracks the performance of 400 mid-sized companies in the US stock market, reflecting the distinctive risk and return characteristics of this market segment. The index was formed in 1991. Stocks in this index have a capitalization between $3.6 and $13.1B.

To know more about the S&P Midcap 400 index, read along.

What is the Midcap index?

The midcap index is a stock index that tracks the performance of stocks that qualify as mid-cap companies — stocks with a market capitalization between $3.6 and $13.1B. There are several indexes for tracking mid-cap stocks, including the S&P Mid-Cap 400, Russell Midcap, and Wilshire US Mid-Cap Index. But the most widely referenced is the S&P Mid-Cap 400.

Formed in 1991, the S&P 400 measure the performance of 400 mid-sized companies in the US stock market, reflecting the distinctive risk and return characteristics of this market segment. The index, which is different from the S&P 500 index, provides investors with a benchmark for mid-sized companies.

For a company to be added to the index, the following criteria must be fulfilled:

  • The company must be based in the United States.

  • Be listed on a stock exchange.

  • Must possess a minimum investable factor of 0.10.

The index is market-cap weighted, meaning that companies which more valuation will have a larger impact on the index. The index is recalculated and balanced in real-time quarterly in March, June, September, and December.

The 5 largest holdings in the midcap index

  1. Molina Healthcare, Inc. (MOH) This is a healthcare provider offering managed health care services to low-income families. It is subdivided into four segments namely Medicare, Marketplace, Medicaid, and Other. As of December 31, 2021, it serves about 5.2 million members eligible for Medicaid, Medicare, and other government-sponsored healthcare programs in 18 states. Molina Healthcare has a total market cap of $18.58B as of July 28, 2022.

  2. SolarEdge Technologies, Inc (SEDG). SolarEdge Technologies Inc. designs and sells inverters, communication devices, and most smart energy management solutions to customers across the globe. Its market cap as of July 28, 2022, is $18.56B.

  3. Bio-Techne Corporation (TECH). The company develops and manufactures instruments, life science reagents, and services for diagnostics, research, and bioprocessing markets across the world. The company’s operations are subdivided into Diagnostics & Genomics, and Protein Sciences. As of July 28, 2022, Bio-Techne has a market cap of $15.04B.

  4. Fair Isaac Corporation (FICO). This is a tech company that offers a wide range of software solutions to companies around the world. It designs and develops software, analytics, and data management products and services that enable businesses to enhance, automate, and make good business decisions. Its operations are divided into two segments namely Software and Scores. As of July 28, 2022, the company has a market cap of $11.60B.

  5. Cognex Corporation (CGNX). This company offers machine vision products to customers around the world. These products are used for tracking, identifying, inspecting, and locating items like mobile phones and automobile tires during their manufacturing processes. The company’s market cap as of July 28, 2022, is $8.74B.

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