The FTSE 250 is an index of tons of of corporations spanning completely different industries and territories. It’s delivered a median annual return of 11% since 1994. By comparability, the FTSE 100‘s produced a extra modest 7% because it started in 1984.

The FTSE 250‘s outperformance reflects its high concentration of mid-cap stocks. These are often growth-oriented companies that are more agile and have significant potential to increase profits compared to the Footsie’s heavyweight shares.

As a consequence, they’ve far better room for share price appreciation.

Nonetheless, lately the FTSE 250 has struggled to rise. Through the previous 5 years it’s appreciated simply 3.1%. That’s far under the FTSE 100’s 12.7% rise over the identical interval.

Might the tide be about to show, although?

Bouncing again?

The FTSE 250’s sturdy efficiency to date in 2024 is a optimistic omen.

Since 1 January, the FTSE 250 has risen 6.5% in worth. That’s only a shade under the FTSE’s 6.6% enhance.

Which means I’d have round £31,950 in my account if I’d invested £30,000 in a tracker just like the Vanguard FTSE 250 UCITS ETF. That’s excluding dividend revenue as properly.

Causes to be cheerful

That’s all properly and good. However can the index proceed its positive kind trying forward?

There are apparent challenges, just like the prospect of extended poor development within the UK (round 70% of the FTSE 250’s earnings are generated on these shores).

However there are additionally causes to be optimistic. Inflation is falling and central banks the world over are slicing rates of interest. This implies shoppers and enterprise ought to have more cash to spend going forwards.

Years of the index’s underperformance additionally means many FTSE 250 shares stay extremely low-cost proper now. As investor frostiness in the direction of UK asset thaws, this might encourage additional good points throughout the mid-cap area as cut price hunters leap in.

A prime FTSE 250 inventory

Traders can attempt to harness giant returns by shopping for a tracker just like the one described above. Devices like this exchange-traded fund (ETF) may be nice at serving to me scale back threat by spreading my cash throughout the entire index.

On the draw back, I’ll by no means beat the market by shopping for easy trackers like this. With a view to do that, I have to determine particular person shares to purchase.

I imagine investing in particular shares in addition to ETFs may be a good way to steadiness threat and reward. Video games Workshop (LSE:GAW) is one FTSE 250 share I’ve purchased for my very own shares portfolio.

The corporate’s share price has rocketed 21.5% within the 12 months thus far. This takes complete good points prior to now 5 years to 164.4% as its earnings have taken off.

Revenues right here can soften throughout financial downturns. However Video games Workshop has to date nonetheless managed to thrive due to its main place in a distinct segment trade. Its Warhammer line of merchandise are the gold customary in tabletop gaming, and appeal to an enormous (and rising) fanbase throughout the globe.

I believe the share has a lot additional to rise, too, because it expands globally and explores tv and movie offers for its content material. Earnings right here leapt 12% within the final monetary 12 months.