SVM's McLean: The latest test for active managers

This year's test for active managers has been the sharp sell-off in mid-cap stocks, as many managers focus on this area for stock picking.

After a strong run, with some dramatic gains in 2013, many mid caps had simply become over-owned by institutional investors. Without warning, the party ended suddenly in March. UK consumer businesses were hardest hit, but the change in trend has also been marked in industrials and technology. While the reverse reflects some concern over UK interest rates and weaker real wage growth, the main driving force has been de-rating, as managers rotate into sectors that have lagged. Profit taking in cyclicals is allowing re-investment in the over-sold areas of mining, defensives and so-called qua...