So-called 'Mid-Cap' firms represent an investing opportunity in the current financial climate, an expert has suggested.
Investors should buy shares in medium-sized (Mid-Cap) firms on the FTSE 250 over industry giants on the FTSE 100, an analyst at Rensburg has suggested.
Paul Spencer said that Mid-Cap shares represented a better bet than those on the blue-chip FTSE 100, as they have lost around ten per cent of their value against the rival index over the past year.
The comparative drop is due to FTSE 250 companies' comparatively higher exposure to consumer spending in the UK: just over 42 per cent of the FTSE 250 is made up of firms in the travel and leisure, real estate, retail and other sectors vulnerable to fluctuations in consumer spending, compared with six per cent of the FTSE 100. This means that, with the onset of the credit crunch, the index has been hit much harder.
According to Mr Spencer there are a "number of reasons to be positive" about Mid-Cap firms, not least because the recent drops in value have made many of the stocks attractively priced. The index is also set to produce better returns for investors who buy now than those who purchase FTSE 100 shares, according to Rensberg's forward projections.
The analyst also provided specific FTSE 250 stock tips for customers. "We…have investments in areas such as funeral homes (Dignity), nursing homes (Southern Cross), water supply and waste management (Northumbrian Water and Pennon) and social housing maintenance (Connaught)," Mr Spencer said.
