Why investors should not bank on outperformance of mid caps

Allianz GI's Simon Gergel explains how changes in macro and micro-economic factors could provide large-cap stocks with a significant boost in the coming years.

What do the following events have in common: the end of the TMT bubble, the global financial crisis, and the end of the commodities supercycle?   They were all significant events that caused large sections of the stock market to collapse. In the UK, they predominantly affected larger companies and are a key reason why the FSTE 100 index has substantially underperformed the FTSE 250 in the first 15 or so years of this century (see chart, below). There may be other reasons for this as well. A stronger performance from the UK economy than many other regions since the financial crisis has...