Investors switch to market giants as alarm bells ring over mid-cap rally

Anna Fedorova
clock • 2 min read

Managers and fund buyers have begun rotating out of UK mid- and small-cap stocks in anticipation of a mega-cap resurgence.

While the FTSE 250 and the FTSE Small Cap indices are both up around 25% this year, the FTSE 100 has only risen 13%, with mega caps such as Shell and Imperial Tobacco in the red for 2013. Those valuation discrepancies may be about to close, managers suggest, as the economic cycle matures and large-cap managers find themselves with money to invest from Vodafone's sale of its US business and subsequent return of cash to shareholders. Matt Hudson, manager of the Cazenove UK Equity Income fund, has been selling mid-cap consumer cyclicals such as Taylor Wimpey and buying mega caps like BP ...

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