However, given the FTSE 250’s long-term capital growth potential, gearing is likely to provide a boost to the trust’s returns that increases the likelihood of benchmark outperformance in the future.
While investors are thoroughly disinterested in the FTSE 250 index, it offers a sweet spot between large-cap and small-cap stocks. Unlike the FTSE 100, it contains fast-growing companies that can realistically produce exceptional share price gains.
Yet it is far less risky than small-caps because of the size, scale, diversity and financial strength of its incumbents. As a result, it offers a potent risk/reward ratio. When exactly the trust and wider mid-cap index will deliver on their potential is a known unknown.
Britain has clearly not reached the end of its present period of rampant inflation and rapid monetary policy tightening that is currently weighing on share prices.
However, a new era will ultimately begin that is more favourable to corporate performance, investor sentiment and share prices.
Given the excellent track record of the JPMorgan Mid Cap investment trust, its large discount to NAV and overweight exposure to cyclical sectors, it is set to deliver exceptional share price returns over the long run.
Questor says: buy
Ticker: JMF
Share price at close: 899p
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