UK Market Barometer: June 2021

Large-growth stocks roared back to life last month, but UK small-cap value stocks are still ahead at the midpoint of the year

James Gard 6 July, 2021 | 1:35PM
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After a value rally for most of this year, June was a strong month for growth stocks worldwide, and that is reflected in our lists of best performing funds and trusts last month. Every month we look at how the stocks in the Morningstar UK Index have performed according to size and investing style, and a similar pattern is visible here too. Large-cap growth stocks were the best performers in June, but small-cap value still has the upper hand in the year to date. June returns for Morningstar UK Barometer

The Morningstar UK Index, which covers more than 300 stocks with a market cap ranging in size from a few hundred million pounds to around £100 billion, gained around 1% in June but is up 13% in 2021 so far – compared with a loss of 11% in 2020. Within the index, the performance of the various styles and sizes of stocks was largely undramatic: mid-cap value stocks were down 1.61%, while large-cap value gained 1.19%. Large-cap growth was the standout category with a gain of more than 4% in June, which took the year to date gain to just over 14%. Only 10 stocks make up this category, but it includes dominant stocks like London Stock Exchange (LSEG), up 5% in June, and Ocado (OCDO), which gained 6% last month. Still, both companies’ share prices are under water so far this year.

Those investors who bought Ocado in 2016 will not complain, however: the stock was the best UK performer since the Brexit vote five years ago, with a gain of nearly 600%. Latest results for Ocado suggest that even with more restaurants open, some consumers are still keen to do their weekly shop online. Over the year, the best performer in this category is equipment rental firm Ashtead (AHT), whose share price has gone up by more than 50%.

Morningstar UK Barometer 2021

Other value categories had a more indifferent month performance wise, with a 1.61% drop for mid-cap value stocks and a meagre 0.03% gain for small-cap value. Within the 38 stocks in the mid-cap value segment, share price performance was volatile in June: the biggest gain was seen with WM Morrison (MRW), which surged nearly 40% as private equity buyers battled to buy the 122-year old company. The worst performer in the group last month was office space company IWG (IWG) whose shares dropped 11% after it told investors that the return to “normal” office life was taking longer than expected. In the year to date, Royal Mail (RMG) is the best performer in the mid-cap value category with a rise of 70%; our recent stock of the week article explains the company’s remarkable turnaround this year.

While small-cap value stocks barely moved the needle last month, many of the stocks within the category are boasting some serious gains in the year to date. Here the recovery in cyclical stocks is clearly visible: oil company Tullow (TLW) is up 100% in the first six months of the year, but this comes after a 53% fall in 2020 following the collapse in crude prices. As global economies start to recover from the pandemic, commodity companies have boomed as prices of raw materials and energy soar. Another stock to benefit from re-opening has been The Restaurant Group (RTN), whose shares are up by a similar amount. Not too far behind is Daily Mirror and OK! Magazine publisher Reach (RCH), whose shares are up 90% amid a turnaround programme and benefits from lockdown reading habits.

At the midpoint of the year, it will be interesting to see if growth stocks can catch up with value for the remainder of 2021. It's worth looking again at the 2020 performance of the various sizes and styles of stock and how dramatic the value recovery has been: last year small-cap value stocks fell 22% while small-cap growth stocks were up by nearly 40%. Whatever else happens in 2021, that wide difference in performance is unlikely to be repeated.


2020 Morningstar Barometer returns

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.

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James Gard

James Gard  is senior editor for


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