Why Do Mid-sized Companies Outperform Other Stocks?

The mid-cap focused FTSE 250 index has beaten both the FTSE 100 and FTSE Small Cap index over the past three, five, 10 and 15 years

Mark Preskett 20 July, 2015 | 4:07PM
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Factor investing is an investment approach targeting stocks that exhibit certain characteristics, such as value, momentum or low volatility, in order to outperform market-cap weighted benchmarks.

One of the most oft-quoted of these factor premiums is size – the historical tendency for stocks with smaller market capitalisations to outperform stocks with a larger market cap.

This can be clearly seen in the UK, where the FTSE Small Cap index excluding-investment trusts, which represents the smallest 270 companies of the 620 firms listed on the FTSE All Share, has outperformed the FTSE 100 over three, five, ten and 15 years.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Barr (A G) PLC468.00 GBP0.00
BP PLC317.65 GBP0.00Rating
Franklin UK Mid Cap A Inc  
HSBC Holdings PLC414.05 GBP0.00Rating
Jupiter UK Mid Cap L GBP Acc5.30 GBP-1.52Rating

About Author

Mark Preskett  is a Senior Investment Consultant & Portfolio Manager for Morningstar UK