Why this income star is backing mid caps over mega caps

ON UK INCOME

Royal London AM's top performing equity income manager Martin Cholwill reveals below why he prefers to buy mid cap stocks over mega caps in the current environment, and what tapering means for returns.

Overall, equity valuations still look undemanding with potential upside from a return of M&A activity, currently close to record low levels. Business confidence remains negatively impacted by economic uncertainty, but in due course acquisitions may well be seen as a route forward for large companies, becalmed by anaemic economic growth, to enhance their growth rates. Strong corporate balance sheets and cashflows all point to this; I believe companies will prioritise acquisitions and dividends over building new factories and similar infrastructure spending. I therefore retain my pre...