Allocators struggle in search for UK funds with large-cap overweights

Fund buyers seeking to move up the market-cap spectrum after a difficult year for smaller stocks say they are struggling to find funds that are overweight UK large caps.

The FTSE 100 index has beaten both the FTSE 250 (ex IT) and the FTSE All Share indices year to 8 October: the large-cap index is down 1.1%, compared to a 1.4% fall for the All Share index and a 5.5% drop for the FTSE 250. However, a large proportion of UK equity managers remain structurally overweight small and mid caps, especially those in the UK All Companies sector, which is down 3.5% year to date. The average fund in UK All Companies had 35.4% in giant stocks and 17.6% in large caps over the past year, according to data from Morningstar (see definitions). The total allocation t...