2017 look ahead: FTSE 250

Over the past five years the FTSE 250 has risen by around 70% – more than double the 31% gain seen on the FTSE 100 in the same period.

But during 2016, the 100 has risen 13% while the 250 is up just 3%. With a weaker sterling looking to be one of the dominant themes of 2017, could the FTSE 100 beat the 250 again as investors seek safety in lower risk large-cap shares?

Andy Brough, who heads up the Schroders pan-European small and mid-cap equity team says the UK economy looks a far better place for investors than other areas in Europe and that fundamentals will reassert themselves in 2017. He also thinks sterling will come back against the euro. 

He says investors want to be in companies that have a rising stream of dividends and that, when looking to invest, 2017 will be more about the individual stocks than the index as a whole. Andy believes Schroders likes house builders because the 'population is still growing', but he is also looking at companies that are reinventing themselves.  

He thinks Photo-Me International (PHTM LN) could go up 20% in 2017 and why NorthGate (NTG LN)) could ‘be on the turn' due to a strong position in the Spanish market and a new management team. He also thinks it could be a takeover play. The third company Andy picks out is WorkSpace Group (WKP LN) which he believes will benefit from the new agile way of working as we see more and more companies take over small spaces. 

When it comes to stock picking, Andy uses a quote from Philip Green: ‘the problem with common sense is it’s not common’.  He says too many people over complicate things. 

He also discusses the 'Arsène Wenger school of fund management'.

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