UK mid-cap stocks look forward to life after lockdown
The FTSE 250 hit an all-time high at the end of last week, as investors look to a post-lockdown recovery.

British mid-cap shares are enjoying the prospect of life after lockdown, says Danni Hewson of AJ Bell. The FTSE 250 has soared by 63.5% since its nadir in March last year, and hit an all-time high at the end of last week. Shares in everything from cruise ship business Carnival to shopping-centre owner Hammerson registered double-digit gains in the space of seven days.
FTSE 100 plods along
Investors in the blue-chip FTSE 100 are not feeling so jubilant, says Julien Ponthus for Reuters. The index is up by 4.5% so far this year but has underperformed other major markets for yet another quarter. It is still 7.5% short of its February 2020 level; trading around 6,880 points this week it also remains below the 7,000 level that it fell through as Covid-19 took hold.
The British market is often described as “unloved”, but perhaps “abandoned” would be a better word, says Ross Clark in The Spectator. The FTSE 100 is up by just 10% since the 2016 referendum. Over the same period the Hang Seng advanced by 42%, the Dax by 44% and the Dow Jones index by 88%.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Yet more and more fund managers are now betting that the blue-chip index’s stodgy energy and financial businesses “have been hammered well beyond [what]they deserved, so there is bound to be a correction in their favour”. Funds network Calastone reports that £600m of net investment flowed into UK equity funds in March, compared with £151m in February, says David Brenchley in The Sunday Times.
The UK economy was particularly badly hit by the pandemic, with GDP contracting by 9.8% last year, compared with a 6.6% fall in the eurozone and a 3.5% decline in the US. That gives it more room to rebound. Indeed, the International Monetary Fund (IMF) thinks the UK is set to expand at its fastest pace since the late 1980s over the next two years, says Liam Halligan in The Daily Telegraph. While Britain’s first-quarter lockdown will see it lag the US this year, come 2022 it could be the fastest growing major developed economy in the world.
FTSE 250’s time to shine
The FTSE 250 is best-placed to gain from the UK rebound, says Laith Khalaf of AJ Bell. The FTSE 100 is very international: roughly 75% of blue-chip earnings come from overseas. That earnings split falls to 50% domestic and 50% overseas for the FTSE 250, not a “pure barometer of the health of the UK economy”, but closer than the FTSE 100. Since the turn of the century the mid-cap index has “wiped the floor with the big blue chips of the FTSE 100”. The FTSE 250 has returned 533% over the past 20 years, far superior to the FTSE 100’s 154%, notes Brenchley.
Fund managers punting on the blue chips are still hopeful that their time will come, says Ponthus. FTSE 100 shares trade on 14.2 times forward earnings, compared with 17.9 in the eurozone and the global average of approximately 19.5. Throw in an attractive 3.1% average dividend yield and UK shares are, as James Henderson of Janus Henderson puts it, “very, very cheap”.
-
SIPP holders to get cash warnings and be offered default funds
News Providers will be required to offer investors a default fund and must warn customers of the inflationary risk of cash savings the regulator has said. What the new rules mean for your retirement pot?
By Marc Shoffman Published
-
Zoopla: Asking price discounts hit a five-year high – is now the time to buy a property?
News Zoopla’s October House Price Index shows sellers are accepting discounts of 5.5% on average to secure a sale – we reveal where homeowners are taking the biggest asking price cuts
By Marc Shoffman Published
-
The fallout from the war on landlords
Investors fleeing the market and the rise in rents are affecting us all.
By Charlie Ellingworth Published
-
Eight small-cap trusts to bet on
Funds investing in market minnows are out of favour, but the cycle will turn. Here are the best bets.
By Max King Published
-
Trust in US TIPS to beat inflation
In an inflationary market TIPS, the US Treasury Inflation-Protected Securities are most compelling says Cris Sholto Heaton.
By Cris Sholto Heaton Published
-
What is Vix – the fear index?
What is Vix? We explain how the fear index could guide your investment decisions.
By Dr Matthew Partridge Published
-
Time to invest in the next agricultural revolution
As the global demand for food increases, food producers are seeking to lower their carbon emissions. Technology will help meet both goals.
By Dr Matthew Partridge Published
-
Asia’s hidden gems: Three undervalued Asian stocks
Personal View Fidelity's Nitin Bajaj highlights three favourite Asian stocks.
By Nitin Bajaj Published
-
Uber's switch to profitability is an opportunity for investors
The ride-hailing platform has just reported its first operating profit and its future looks bright.
By Stephen Connolly Published
-
The bond bust bodes well for equities
Rising yields on government debt herald the end of the free-money era and good news for investors.
By Max King Published