The FTSE Small Cap Index has edged up by 5.2 per cent in the year to date, a similar return to the domestically focused FTSE 250. Both indices have come up short of the UK main benchmark, which has benefited from strengthening valuations through 2025. It could be that the UK’s small and mid-cap companies are more susceptible to domestic economic anxieties, not least of which the growing uncertainties over the upcoming Budget in November.
Returns across the indices are far from uniform, as some sectors are more prone to institutional outflows and the consequent volatility that usually entails. Oddly enough, beta readings for certain stocks you might automatically assume would be subject to greater volatility indicate the exact opposite. It’s generally held, for instance, that tech shares are relatively volatile, a consequence of their high valuations, price/earnings ratios, and growth expectations. But that assumption could be more applicable to US stock markets.