Allianz's Gergel: My four UK mega-cap 'contrarian' calls

Simon Gergel, manager of the Merchants trust, explains why he is shunning recently re-rated mid caps in favour of "disappointing" mega caps.

It is no shock the concentration of income in the UK stock market causes a potential problem. The largest ten income stocks produce 53% of the total market's income. These are typically the mega-caps like Royal Dutch Shell, Vodafone or AstraZeneca.  As a group, they have been disappointing investments. They typically operate in challenging industries like oil and gas, banking or mining. Even previously fast growing industries, like pharmaceuticals and mobile telecommunications, have seen increasing competition and greater pricing pressure.  In recent years, the FTSE 100 index has lagg...