Brexit and the FTSE 250: the investment case
The FTSE 250 UK mid-cap index has outperformed the FTSE 100 blue-chip index consistently in recent times. But will that still hold as the UK negotiates its Brexit from the EU, amid fears over future economic growth?
Since 2000 the FTSE 100 has barely changed (excluding income), but the mid-cap FTSE 250 is up by more than 20%. What has been driving this and can the engine of growth continue to drive the mid-cap market?
Andy Brough, head of the small and mid-cap team at Schroders, thinks this outperformance will continue despite Brexit, with FTSE 100 stocks having seen some big dividend cuts in recent years.
Describing the FTSE 250 index, Brough uses the Heineken advert for inspiration, saying that it is the index that ‘refreshes.’ He goes on to say that while the top of the FTSE 100 stagnates, the mid-cap index is constantly changing. There are a number of new companies coming up from below, and others dropping out of the FTSE 100, and then restructuring; this offers opportunity for investors.
Brough also thinks that Brexit offers more positives than it does negatives and that the UK economy should benefit in the longer term.
Use our ETF screener to track the FTSE 250 and other mid-cap indices.