Buy into UK mid-cap stocks' recovery with this investment trust

Schroder's investment trust specialising in UK mid-cap stocks has an impressive long-term record and looks cheap

The FTSE 250 index of mid-caps has done very well over the past quarter-century. As Anthony Lynch, manager of the Mercantile Investment Trust, noted in February, “the FTSE 250 Index of mid-cap companies has not only trounced the FTSE 100 since 1995 but has also beaten the S&P 500 Index over the same period”.

In the last five years, however, the 11.6% return of the FTSE 250 has lagged the FTSE 100’s 15.5%. So this could be a rare opportunity to buy mid-caps at bargain prices. The £195m Schroder UK Mid Cap Fund (LSE: SCP) is on a 15% discount to net asset value (NAV). Admittedly, the performance of the £1.9bn Mercantile Trust has been 15% better over the last five years, but Mercantile trades on a discount of 10% and the ten-year numbers favour SCP.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.