RLAM's Mitchell: Beware the housebuilders bubble

Royal London's Derek Mitchell has urged caution on the surging housebuilding sector, which has been a major contributor to mid-cap fund performance over recent months.

Stocks in the sector have soared on government support, culminating in March with the announcement of the Help to Buy scheme. A sub-sector of eight FTSE All Share housebuilders is up 42.7% for the year to the end of May, according to Morningstar, compared to 15.7% for the index. But Mitchell (pictured), manager of the £155m Royal London UK Mid Cap Growth fund, said a "bubble" was building, which could burst at the next general election. "It has been a great sector to be involved in and now we have this unbelievable scenario [of performance]," he said. "Everyone is speculating th...