A fully flexible way to invest
3 minute read
Many investors in the shares of UK companies focus on the largest companies, which typically make up the FTSE 100 Index. The smaller companies market offers potentially higher returns, but with higher risks. However, sitting in between large and small companies is the mid cap market, which to many investors offers the ‘sweet spot’ of balancing potential returns versus risk.
Who's it for? All investors
When investors look to invest in the shares of UK companies, they typically focus on funds which invest in the larger companies. Those investors willing to accept higher risk and higher volatility for potentially higher returns may look at the smaller companies market as their next step. But there’s another spot in the UK market that’s worth looking at – the middle-sized companies. This part of the market offers investors the ability to invest in some of those companies that could become the large companies of tomorrow.
The total value of a company is known as ‘market capitalisation’, or ‘market cap’ for short. It is calculated by adding up the total value of all the company’s shares in circulation. It is effectively the value of the company as being valued by the market. In the UK, the 100 largest companies listed on the London Stock Exchange are grouped together in an index called the FTSE 100. The next 250 largest companies form an index called the FTSE 250 Index, and the remainder are collectively known as small caps. The FTSE 250 Index is known as the mid cap index.
There are many reasons why investors look at UK mid caps as part of a diversified portfolio. Companies in this part of the market include many that have grown in size and made their way up from previously being a smaller company.
Mid-sized companies are typically growing strongly, usually because they are expanding rapidly – maybe expanding into new markets or expanding the range of goods and services they offer. As a mid cap company, they catch the eye of investors, who consider whether these companies can continue to grow rapidly and flourish to become the large companies of tomorrow. It’s this rapid growth that attracts investors to the mid cap market.
The HSBC FTSE 250 Fund invests in all 250 of the middle sized companies in the UK. The fund is designed to deliver the same returns as the FTSE 250 Index. Being a tracker fund, it’s operated automatically rather than by a fund manager, which dramatically reduces its running costs, though that does mean it can never outperform the market.
If you’re looking to gain general exposure to the UK mid cap market, the HSBC FTSE 250 Fund could be worth looking at. If passive funds appeal to you, you may wish to look at the tracker funds in the Barclays Funds List. We have selected 12 tracker funds which allow you to track the performance of different investment sectors at a low cost. Find out more information on these funds.
The tracker funds on our Funds List are selected solely on cost – those featured are simply the cheapest available tracker fund we offer in each sector where a relevant product is available. The funds included in this selection are reviewed every six months, in June and December.
Correct at the time of publishing.
To diversify your investment, you may like to consider our own Barclays Ready-made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These Barclays multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.
Past performance of the fund and its manager are not a reliable indicator of their future performance.
We don’t offer personal investment advice so if you’re unsure you should seek that independently.
Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.
These are our current opinions but the future, as ever, is uncertain and outcomes may differ.
Read the Assessment of Value report [PDF, 3.2MB] for funds run by Barclays.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.
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