What is driving UK mid-cap performance?

Mark Martin, manager of the Neptune UK Mid Cap fund, explains why investors should expect M&A activity to return to markets, and which mid-cap companies could be prime targets for takeover.

The FTSE 250 Mid Cap index has significantly outperformed the wider UK stock market over the long term, materially underperforming only in the build-up to the credit crisis. The Mid Cap index is currently well above its previous all-time high in 2007, in contrast to the FTSE 100, which remains some way below equivalent levels. Recent outperformance may come as a surprise given the greater exposure to the domestic economy in the Mid Cap index and the fact that the UK economy faces well-known headwinds. There are a variety of good reasons for the Mid Cap index’s long-term outperforma...