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The FTSE 250, often overshadowed by its larger counterpart, the FTSE 100, may be ready for a turnaround in 2025. This index of mid-cap companies has weathered a perfect storm of challenges, including higher interest rates and a sluggish British economy. These have weighed heavily on its performance — it’s down 5% over five years. However, as we enter a new phase of monetary policy (falling interest rates), the unloved FTSE 250 could present an opportunity for investors to generate significant wealth.
Good omens
The FTSE 250 has typically outperformed during periods of falling interest rates. As the Bank of England embarks on a rate-cutting cycle, this trend could reassert itself. During previous rate-cutting periods, such as 1992-1994, the FTSE 250 delivered an impressive 87% total return, significantly outpacing the broader market.
The potential for outsized returns is further…
