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

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.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Barr (A G) PLC453.00 GBP0.00
BP PLC290.00 GBP0.00
Franklin UK Mid Cap A Inc5.42 GBP-0.66
HSBC Holdings PLC373.30 GBP0.00
Inmarsat PLC  
Merian UK Mid Cap A GBP Acc4.13 GBP1.60

About Author

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

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies