Are UK funds too exposed to smaller companies?

Investors are becoming increasingly concerned an increase in exposure to small and mid-cap stocks by UK All Companies funds could leave them vulnerable to a correction.

Overweight positions to small and mid-cap stocks have helped drive three-quarters of funds in the IMA UK All Companies sector to beat the FTSE All Share index over the past year, data compiled for Investment Week shows. In total, 207 of the 273 funds in the sector beat the 8.4% index return over one year to 24 March, according to FE data. Morningstar defines 70% of the FTSE All Share index as large cap, the next 20% as mid cap and the remaining 10% as small cap. Research from the data provider shows 180 - or two-thirds - of funds in the sector currently have an overweight to mid ca...