UK mid-caps: an improving outlook

UK mid-caps have perked up and the rally may run further, but long-term investors should remain selective

Royal Exchange building and skyscrapers of London city
(Image credit: Getty Images)

Sentiment towards Britain as an investment destination seems to be improving. Sterling is back above $1.30, while the mid-cap FTSE 250 stock index is at its highest since April 2022 and has outperformed the large-cap FTSE 100 over the last three months. Since the FTSE 250 is seen as the best gauge of domestic sentiment – nearly half of its constituents’ sales come from the UK, compared to around 20% for the FTSE 100 – that may imply views on the UK economy are becoming more optimistic. 

Hopes for an end to the incessant political drama of the past few years must be helping. I wasn’t impressed by the substance of the agenda unveiled in this week’s King’s Speech, which was a mix of woolly aspirations (talk of boosting growth without the concrete measures that are needed) and further state interference in matters of personal choice (the resurrection of Rishi Sunak’s anti-smoking law). However, what matters is sentiment, and many will welcome evidence that Britain now has a rather dour, statist government, rather than a three-ring circus. 

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.