Mid Cap stocks have always been hard to define. While market capitalization is the easiest way to define a mid-cap stock, these classifications tend to be fluid and companies move in and out of this classification. What is the option in front of us? It would be easier to use mid-cap mutual funds as a proxy for the mid cap space and compare them with diversified large-cap funds. Over the 3 calendar years (2014-2016), large cap funds returned 17% on an annualized basis. During the same period, the mid-cap funds returned a whopping 35% on an annualized basis. What could be the reason for this stark outperformance and is it sustainable? Typically, there are times when mid caps have done better and there are times when large caps have done better. What you need to remember is that from an alpha point of view, these mid caps matter because they are the ones that eventually grow to become large caps in the long run.