Will the FTSE 250 Continue to Outperform the FTSE 100?

Mid-caps, as defined by the FTSE 250 index, have outperformed the large-caps, the FTSE 100, by more than 100% over the past 15 years

Dan Kemp 24 February, 2017 | 7:50AM
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As investors attempt to make sense of record high stock markets and political uncertainty, the question of ‘quality’ has become increasingly prominent. Debates around quality are framed in several ways, but more recently the discussion has concentrated on the apparent decoupling of large stocks and their smaller counterparts. This phenomenon is best illustrated in the U.K. where mid-caps, as defined by the FTSE 250 index, have outperformed the large-caps, the FTSE 100, by more than 100% over the past 15 years.

The evolution of our long-term expectations remains segmented by sector

Many have concluded that a size premium genuinely exists in the U.K. because the companies underlying the FTSE 250 index grow earnings at a superior rate to large companies. But to conform to this theory, it is worth re-iterating what is meant by the size premium and to investigate the underlying composition of the index.

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About Author

Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA

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