The UK stock market is having a moment. After a number of years in the shadow of high-flying US shares, Britain’s under-appreciated stock market listed companies have seen a shift in sentiment from investors.
They have been attracted by the relatively cheap valuations for UK companies compared to US tech giants, combined with robust business models and balance sheets, high dividend yields and the prospect of corporate outperformance in a technology-savvy and knowledge-driven economy.
Meanwhile the UK stock market has produced a higher number of so-called ’30 baggers’ – companies whose shares have risen thirtyfold – over the past 30 years than the US stock market, according to Schroders.*
The leading UK stock market index, the FTSE 100, garners most of the headlines and delivered a 25.8 per cent total return in 2025, in sterling, compared to a US dollar 17.9 per cent total return for the US’s leading market, the S&P 500.
Meanwhile, the FTSE 250 index, traditionally seen as the more growth orientated part of the market, saw a total return of 13 per cent in 2025, in sterling.
In 2026, returns are telling a similar story, with the FTSE 100 up 10.2 per cent year-to-date to the end of February, compared with 6.1 per cent for the FTSE 250.
The weaker performance of the FTSE 250 relative to the FTSE 100 in 2025 was down to an upwards re-rating experienced by larger companies. As a result, many mid-cap companies appear undervalued. Public markets appear unwilling to value these companies highly, despite them attracting a wave of takeover bids.
In addition, mid-cap companies are increasingly buying back their own shares to take advantage of this undervaluation.
The FTSE 250 has produced a significant number of so-called ’30 baggers’ – those exceptional price risers – over the past 30 years.
The Schroder UK Mid Cap Fund plc Investment Trust, managed by Jean Roche and Andy Brough cherry-picks around 50 of what they consider to be the best UK mid-caps. The managers have pointed out that valuations look unusually low relative to both larger UK companies and mid-caps from elsewhere in the world, which may bode well for future performance.
We look at the opportunity for UK mid-caps and three of the shares Schroder UK Mid Cap holds.
Jean Roche, lead manager of the Schroder UK Mid Cap Fund plc Investment Trust
Investing in UK mid-caps
When we talk about mid-caps in this context, we mean the 250 companies which sit below the FTSE 100 in terms of their market capitalisation. Market capitalisation is the total value of a company’s freely traded shares (their ‘free float’), calculated by multiplying their share price by the number of shares available to the public.
Mid-caps are considered more reflective of the UK economy than their FTSE 100 counterparts, but many FTSE 250 companies have international business models and are global leaders in their fields. In fact, around half of the revenue generated by these stocks are generated outside of the UK.
Mid-caps’ smaller size can offer a greater opportunity for future growth than their larger siblings on the FTSE 100, and a chance to be nimbler. Meanwhile, many also have strong balance sheets and pay rising dividends.
The wave of foreign, domestic and private equity takeovers of UK mid-cap firms in recent years highlights their attractiveness to buyers. This is why mid-caps have, until recent years, commanded a premium to UK large caps.
Now we have a situation where FTSE 250 stocks are undervalued, even by comparison with their FTSE 100 peers, which themselves are on the less expensive end of international valuation comparisons.
This offers an opportunity for investors to spot FTSE 250 gems that others may have overlooked. Mid-cap companies can vary substantially in terms of their financial strength, growth prospects and other qualities, so an active stock-picking approach using fund managers who meet and get to know companies well can pay off here.
Schroder UK Mid Cap Fund plc Investment Trust’s top ten holdings at 28 February 2026
Schroder UK Mid Cap’s managers aim to provide investors with access to part of the UK stock market, which they think is one of the world’s most attractively valued. They believe the market is ‘positioned in a sweet spot for innovation disruption and growth’.
The managers invest in the FTSE 250 excluding investment trusts, targeting a high-quality portfolio of around 50 of the most attractively valued companies, which benefit from either characteristics dubbed ‘unique’ (generally high margin, cash generative companies with distinct and enduring competitive strengths giving them scarcity value which leads to pricing power) or ‘flex’ (a company operating in a more cyclical industry or one at strategic crossroads), and can bring dependable long-term growth to investors.
Below are three examples of internationally facing stocks the trust holds.
(Reference to stocks are for illustrative purposes only and does not constitute a recommendation to buy or sell.)
Chemring
Chemring is a c.£1.5bn market cap UK defence technology company. Its products range from flares and decoys to sensors and counter-IEDs. Its Roke division also has AI and data intelligence capabilities.
Chemring is considered a global leader in its field and as defence spending has increased due to geopolitical tensions, it has seen an uplift in its business and growth prospects.
A key operational country for Chemring is Norway and with the backing of the Norwegian government it is building a new production facility there to more than double capacity.
Jean Roche says: ‘We see Chemring as a world-class UK defence asset and note that it is playing a key role in re-arming the EU.’
SSP runs food and drink outlets in travel hubs, such as Starbucks in London’s Heathrow
SSP
SSP is the little-known name behind well-known eating and drinking choices in major travel locations, such as airports, railway stations and motorway services.
Often associated with its own brand, Upper Crust, SSP does far more, operating franchises for world famous brands such as Burger King, Starbucks, M&S and many international, locally strong brands.
With high footfall and a captive audience made up of those using airports, transport and service stations, SSP can command premium prices for its food and drink – and is benefitting from the post-Covid travel spend catch-up, as well as from weaker players dropping out.
SSP operates in almost 40 countries around the world, from Europe to the Americas, Asia-Pacific and the Middle East and has an Indian joint venture, Travel Food Services, which itself successfully listed on India’s stock market last summer.
Jean Roche says: ‘SSP is an interesting mix in that it is exposed both to structural growth and self-help, it’s also a former stock market darling.’
Genus
Genus is another example of an innovative, knowledge-driven UK medium-sized company that is considered a global leader.
It provides what is known as elite animal genetics, mainly for pigs and cattle, which improve livestock traits, such as feed conversion, disease resistance and growth rates.
It is a business rich with intellectual property, which sits above the meat and dairy supply chain, and can benefit from global growth in demand for meat and efforts to improve agricultural production and efficiency.
The ‘Pig Improvement Company’ division is a strong performer for Genus in China, which is the world’s largest pork market. Meanwhile, Genus’s gene-edited PRRS resistant pig was approved by the FDA for use in the US food supply chain at the end of April 2025.
Jean Roche says: ‘Genus is a unique company in terms of what it supplies, its market position and the intellectual property which sits within it’
* 30 baggers are stocks which appreciated in value 30x more (based on total returns) in the 30 years to 30 November 2024.
> Find out more about the Schroder UK Mid Cap Fund plc
> Insights into FTSE 250 CEOs – listen now to Schroders’ Mid 250 podcast series
Past Performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.
Any sectors, securities, regions or countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.
The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors.