Mr Watts adds that while the UK mid-cap sector has seen a share price recovery in absolute terms, relative to the UK market as a whole it has “only just kept pace”, driven by internationally facing mid-cap stocks that have benefited from sterling weakness and the recent reflation trade. “[That] part of the market has performed very well, so while UK domestic cyclicals have recovered in absolute terms, relatively they still look attractively valued,” he says.
Ian Forrest, investment research analyst at The Share Centre, notes: “While the FTSE 100 has stalled so far this year, mid-cap stocks – as represented by the FTSE 250 index – have continued to rise strongly, which means investors need to select their investments carefully.
“Investors in the UK will need to be careful about where they place their bets, and diversification across sectors and asset classes is more important than ever. While defensive stocks have enjoyed a good recovery this year after falling back last year, other sectors look better value, including defence, packaging and construction.”
Nyree Stewart is features editor at Investment Adviser
