Value in UK firmly resides in mega-caps

ON UK INCOME

Although some investors have cautioned on mega-cap P/E multiples, Santander's senior fund manager Stephen Payne believes mega caps are where the value is in UK equities.

The UK equity market is now well into its fifth year of a recovery from the global financial crisis and the broader market has almost doubled since the end of 2007. However, this masks the even stronger performance of mid-cap stocks in the UK, which have generated impressive total returns of 184%. This compares to a more modest, albeit still very respectable, return of 86% from the FTSE 100. The question now is whether this outperformance can continue going forward? Mid-cap stocks have outperformed due to a combination of superior growth and a re-rating from depressed levels. This gro...