US funds focus on media stocks, banks to find value as mid-caps rally

Highest premiums: A specialist works at his post on the floor of the New York Stock Exchange. Mid-caps are up 14% for the year to date and sport an average price-to-earnings ratio of 16.9 times forward earnings, for their highest valuation premiums to small-cap stocks since 2017.

NEW YORK: The S&P 400 Mid-Cap index has surged to its best start to a year since 1991, both rewarding fund managers and forcing them to work harder to seek out bargains in a group that is now the most expensive part of the US market based on their historical averages.

The rally in mid-cap stocks - companies with a market valuation between US$2bil and US$10bil - has come during a broad rally in global stock markets as investors price in a resolution in the trade talks between the United States and China and fewer interest rate hikes by the Federal Reserve.