There are a growing number of reasons that the FTSE 250 may be expected to outperform the FTSE 100 over the next couple of months. Seven of these reasons are listed below.
1. The UK vaccine speed. It is strange to see the UK at the front of anything vaccine-related. However, the UK has nearly vaccinated 20% of their population now and the rollout is fast. It’s been a good response from the UK in comparison to the rest of the world. Israel is the lead country approaching a 75% vaccination rate.
2. Some Goldman Sachs reports are forecasting a 19% GDP rise for Q2 in the UK. Growth is set to return.
3. Within this growth, the UK service sector is poised for a very good recovery. If the UK see the end of lockdowns this will mean the sector can start growing again.
4. There has been a high savings rate in the UK. Because of fiscal support and the UK furlough scheme that has been keeping incomes up during the lockdown. This means that strong demand is expected in the economy once movement is possible again.
5. The make up of the FTSE250 includes a high concentration of financials and consumer services. This means that the 250 should outperform the FTSE100 which is also set for growth between now and June.
6. The UK is now post Brexit: The ‘no-deal’ risk has gone. This is positive for the UK and the investment that was waiting for Brexit risk to disappear can move back into the UK.
7. Finally, there are very good seasonals for the FTSE 250 which is set to gain between now and June. Check out the seasonals chart at the top.