UK mid caps are rerating currently, but where do managers think the real value lies?
Gene Salerno head of asset allocation and equities, Kleinwort Benson Valuation drag Mid and small caps re-rated significantly in 2013, driven by multiple expansion rather than earnings growth. However, with profits at all-time highs, there is doubt as to whether this will continue. The FTSE 250 is currently trading with a median P/E of circa 18x, with dispersion between the most expensive and cheapest quintile stocks at its lowest level in 15 years. When compared to mega caps – trading at circa 12x, mid and small caps as a whole look to be at risk. However, large caps such a...
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