The UK mid cap sector has had a torrid time over the past 12 months. It has lost 16.3 per cent of its value, compared with a more modest loss of 6.3 per cent from the FTSE 100 index of blue chips.

UK mid cap stocks are heavily exposed to the consumer economy, which has taken a pounding in the past 12 months. Retailers, travel and leisure and household goods are all among the sectors that are down more than 25 per cent over the past year. In contrast oil & gas producers and mining stocks - major constituents of the FTSE 100 index - have performed extremely well.

Now some people in the investment industry are starting to think that mid caps have performed so poorly against their large cap peers over the past 12 months that they are looking quite attractive. Paul Spencer, of Rensburg, the fund manager, says: “Valuations of mid caps are now starting to offer some very interesting investment opportunities. The average price-earnings ratio on mid caps - a key measure of how expensive a stock is - has fallen from 16 to less than 12.” At this level, says Mr Spencer, mid caps are almost as cheap as their large cap rivals and look good value.

But cynics are entitled to point out: ‘He would say that wouldn’t he’ since Mr Spencer manages a mid cap fund - the Rensburg UK Mid Cap Growth Trust.

Independent financial advisers such as Stephen Marriott, of Bestinvest, and Brian Dennehy, of Dennehy Weller & Co, say it’s too soon to be going heavily back into mid caps. Mr Dennehy says: ”The UK economy could be under the cosh for some time and mid caps are heavily exposed to it so I don’t think it makes sense to buy directly into the sector right now as there are not enough attractive opportunities. I would rather go for a fund like M&G Recovery or Artemis Special Situations, that can range across all sectors and pick attractive stocks wherever it finds them.”

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