Josh McCathie, lead fund manager of the VT Downing Small & Mid-Cap Income Fund, has expressed optimism about the current investment landscape in the UK, particularly within the small and mid-cap sectors. According to McCathie, the easing of inflation and interest rates could serve as a catalyst for market support, presenting a unique opportunity for investors. The FTSE 250's current trading at a 22% discount to its long-term average, and a significant discount relative to the FTSE 100, underscores a rare investment scenario that has historically preceded strong performance in small and mid-cap stocks.
Despite acknowledging the presence of geopolitical risks, McCathie emphasizes the potential for higher returns in the small and mid-cap space, driven by anticipated earnings growth and dividend returns. The VT Downing Small & Mid Cap Income Fund distinguishes itself by focusing exclusively on these sectors, unlike other funds that prioritize larger caps. McCathie also challenges the common perception of smaller companies as solely growth-focused, highlighting their overlooked dividend potential.
Celebrating three years at the helm, McCathie reflected on the fund's performance, noting its significant outperformance compared to other small-cap mandates and overall positive results, despite facing challenges in 2023. His advocacy for UK equity markets is rooted in the potential for robust dividend yields and strong returns, offering a compelling case for investor optimism. For more insights into the VT Downing Small & Mid-Cap Income Fund, visit https://www.vt.co.uk.
