If the cap fits: How small- and mid-caps play a big role

It is no great secret that the UK equity market is highly concentrated. However, equity income fund managers still need to deliver a premium yield, adding to the problem of portfolios with sizeable overweights in a limited number of sectors and stocks. It is easy to see why this occurs: half the FTSE All Share yield comes from just ten companies and 87% from the FTSE 100. Of the 40 sector groups represented in the UK market, five contribute 52% of the yield. Concentration, being the opposite of diversification, carries inherent and familiar risks. While we often see large companies as...