UK mid-cap shares offer an “attractive hunting ground for investors where the companies are large enough to be resilient, yet small enough to be dynamic, adaptive and offer opportunities for growth.”
That’s according to research from Martin Currie, the Edinburgh and Leeds-based fund manager that is owned by Franklin Templeton and has more than $20 billion of assets under management.
“This sweet spot in the market offers a diverse array of investment options, especially for active managers looking to add value,” wrote
“Patient investors have enjoyed a remarkable two and a half decades. But we think things could get even better from here.
“We may not be able to predict the next 25 years, but we are certainly excited about what’s in store for UK mid-caps in the next 2-5 years.”
e UK equity market is “currently extremely cheap – offering an exceptional opportunity for investors.”
He said low valuations have been a persistent feature of the UK equity market since the outcome of the Brexit vote.
“However, the tides are turning,” wrote Bullas. “The FTSE 250 ex Investment Trusts has returned 18.5% in the 12 months to 31 July 2024.
“Positive momentum is building, and the market is slowly beginning to re-rate after almost a decade in the doldrums. The Bank of England has also begun cutting rates, which has historically marked the early stages of a multi-year rally in UK mid-cap stocks.
“Private equity firms and corporations with deep pockets have noticed the UK offers quality investments at bargain prices.
“There were 32 UK transactions of more than £100 million announced in the first half of 2024, which was the second largest, globally, after the US. Of which 14 and c.£36.7 billion of market capitalisation related to FTSE 250 constituents.
“Ongoing interest in takeover activity will contribute to upward price pressure across the market.
“However, upon closer examination, you’ll see the UK equity market offers much more than undervalued stocks. It has an array of companies with excellent fundamentals, about to benefit from strong trends that will help drive returns.”
Bullas concluded: “With 25 years of experience in the thriving UK mid-cap equity market, we’ve learned to recognise critical turning points.
“We believe in investing in quality companies ahead of these changes and are confident and patient enough to wait for the market to catch up.
“We couldn’t be more excited about the prospects for UK mid-caps, particularly those in our portfolio, over the next 2-5 years.”