UK Mid-Cap Quality 25
Twenty-five FTSE 250 names with ROIC above 15%, leverage below 1.5x and 5-year revenue growth above 7%, capped at 6% per name.
Why it won
The FTSE 250 has been the most-discounted developed-market mid-cap index for three years, but quality dispersion inside it is enormous. This screen carves out the genuine compounders from the structurally challenged names dragging the headline index down. It is the most-saved UK-themed prompt on the platform.
The prompt
FTSE 250 quality index. ROIC above 15%, net debt to EBITDA below 1.5x, 5-year revenue CAGR above 7%, gross margin above 30%. 25 names, weighted by ROIC capped at 6%.
Methodology
- Universe: current FTSE 250 constituents, excluding investment trusts and SPACs.
- Quality screen: 5-year average ROIC above 15%.
- Balance-sheet screen: net debt to EBITDA below 1.5x.
- Growth screen: 5-year revenue CAGR above 7%, gross margin above 30%.
- Weight by ROIC ranking, capped at 6% per name, rebalanced annually in May.
Backtest
Figures are illustrative for editorial purposes. Past performance does not guarantee future results.
Holdings
| Ticker | Name | Weight |
|---|---|---|
| GAW.L | Games Workshop Group | 6.0% |
| RTO.L | Rentokil Initial | 6.0% |
| IHG.L | InterContinental Hotels Group | 6.0% |
| CCH.L | Coca-Cola HBC | 5.0% |
| WTB.L | Whitbread | 5.0% |
| GNS.L | Genus plc | 4.0% |
| SPX.L | Spirax Group | 5.0% |
| DPLM.L | Diploma plc | 5.0% |
| HLN.L | Haleon plc | 4.0% |
| CRDA.L | Croda International | 5.0% |
| VCT.L | Victrex plc | 4.0% |
| RWS.L | RWS Holdings | 3.0% |
| BNZL.L | Bunzl plc | 5.0% |
| WEIR.L | Weir Group | 4.0% |
| IMI.L | IMI plc | 4.0% |
| HLMA.L | Halma plc | 5.0% |
| JD.L | JD Sports Fashion | 3.0% |
| GRG.L | Greggs plc | 3.0% |
| HWDN.L | Howden Joinery Group | 3.0% |
| NXT.L | Next plc | 4.0% |
| MRO.L | Melrose Industries | 3.0% |
| CRH.L | CRH plc | 3.0% |
| FERG.L | Ferguson Enterprises | 3.0% |
| BLND.L | British Land Company | 1.0% |
| AHT.L | Ashtead Group | 1.0% |
Risks
- FTSE 250 is structurally exposed to UK domestic consumer and housing cycles.
- Several names (Games Workshop, Greggs) have low free float and can be illiquid at scale.
- ROIC weighting can favour asset-light businesses that screen well but carry brand-concentration risk.
Earlier weeks
Thirty global compounders with ROIC above 20% and zero exposure to the Magnificent Seven, on a 5-year backtest that quietly clears SPY.
Twenty defence and aerospace names with no exposure to cluster munitions, nuclear delivery systems or anti-personnel mines, weighted by 3-year backlog growth.
The 25-year dividend-growth list with tobacco names dropped and the savings redistributed by FCF coverage, not yield.
