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The Sleeping Giant of the US Middle Market

The Sleeping Giant of the US Middle Market

August 02, 2017

There are numerous benefits in investing in the US middle market. With the average annual yield nearing 7%, the national middle market is ranked as the second highest contributor of revenue in the US economy, directly under the S&P 500 (1). Perhaps you are unclear on what the US middle market is and how it works. I’d love to explain! I like to think of it as the sleeping giant of investing that represents over 200,000 companies and 50 million workers (1). It situates itself as the world’s third largest economy and has had a profitable history of averaging 11% yields over the past 15 years. The US middle market consists of all the companies who operate in between our population of small businesses and billion-dollar companies. This intermediate zone creates a stable, emergent economy built on consistent business practices and historic growth. Functioning within the middle market typically means less risk, higher returns, and an optimistic future of business dealings. In recent years, our middle market has significantly grown and generated over $5.9 trillion annually, only falling short of China (2). This is significant, and in researching the best ways to invest and interpret the middle market, I have found that it adds to any investment portfolio with its stability. Due to the size of most middle market companies, there is limited exposure to global events which has a cushioning effect on its market. Billion dollar companies are unfortunately subject to fluctuation due to the volatility of the global market, yet the middle market is primarily nationalized, making it safer even when there are outside factors triggering the economy (3).

Overall, I believe choosing to diversify your portfolio through investing in the middle market is worth considering. With the speculative growth being nearly $18 trillion by 2020, the US middle market will continue to be an opportunity to invest and help stimulate the national economy as a whole (3).

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither Kestra IS or Kestra AS offer tax or legal advice. Past performance does not guarantee future results. All investments involve varying levels and types of risks. These risks can be associated with the specific investment, or with the marketplace as a whole. Loss of principal is possible.


S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.

1 National Center for the Middle Market, 2Q 2016 Middle Market Indicator. The Middle Market Indicator is a quarterly business performance update and economic outlook survey conducted among 1,000 C-Suite executives of middle market companies. For the purposes of the 2Q 2016 Middle Market Indicator, the National Center for the Middle Market de ned the U.S. middle market as U.S. companies having annual revenues from $10 million to $1 billion.

2 Bloomberg.

3 FS Investments