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The FTSE 250 is supposed to be the growth engine of the UK stock market. Packed with mid-cap companies at earlier stages of their development, the index has historically outpaced the FTSE 100 over long time horizons. But the last five years have told a very different story.
Since May 2021, the FTSE 100’s achieved a 76.8% total return for index investors. That’s a 12.1% annualised return, well ahead of its long-run 8% average. But the FTSE 250’s only mustered a lacklustre 15.5% over the same period. That’s the same as 2.9% a year – less than some savings accounts have paid out.
So what went wrong? And where should I be looking to invest my money today?
Why the FTSE 250 has struggled
The answer lies in geography. FTSE 100 companies generate the vast majority of their revenues internationally. By comparison, businesses in the FTSE 250 are far more dependent on British consumers and businesses. And it’s no secret that the UK economy’s been in a persistently poor state for years, weighed down by inflation, high interest rates, and anaemic growth.
This broad dependency on the UK economy by most mid-cap companies has been a meaningful drag. And with market conditions still fragile in 2026, the recovery of the broader index remains riddled with uncertainty.
But here’s the crucial point. While the index as a whole has struggled, the same isn’t true for all of its constituents. In fact, some have gone on to deliver explosive returns despite all the headwinds.
Stock pickers are winning
Balfour Beatty‘s (LSE:BBY) a compelling example of a FTSE 250 firm that’s dominated. The leading infrastructure group has delivered a 202.78% total return since May 2021, massively outpacing both the FTSE 250 and the FTSE 100 alike.
Digging deeper, it isn’t hard to understand why.
Surging demand for energy infrastructure, defence construction, and US public buildings has kept the group’s order books full both at home and abroad. And with management relentlessly focusing on cash generation, the balance sheet’s also seen discernible improvement, with the group’s net cash position now sitting at just over £1.5bn in the first quarter of 2026.
This continued momentum’s resulted in leadership recently reiterating its full-year guidance backed by a flurry of new contracts including a new $270m redevelopment project at the Fort Carson US army base in Colorado, a $150m deal to build a new data centre, a £138m contract for a new dual carriageway and two bridges in Lincolnshire, and a seven-year £315m Highways Maintenance agreement in Warwickshire.
Simply put, the business seems to be firing on all cylinders. So is this a no-brainer for investors seeking a FTSE 250 growth opportunity right now?
What to watch out for
Infrastructure projects are inherently complex. And it isn’t uncommon for cost overruns and timeline delays to materialise, especially in the current macroeconomic and global trading climate, where disruptions are likely to emerge.
Needless to say, such disruptions could weigh heavily on earnings and potentially derail Balfour Beatty’s recent momentum.
Nevertheless, it’s hard to ignore the underlying quality of this business. And with a strong and expanding order book with an enviable cash position, I think investors might want to consider taking a closer look at this enterprise.
Should you invest £5,000 in Balfour Beatty Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Balfour Beatty Plc made the list?
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Zaven Boyrazian does not hold any positions in the companies mentioned.
The post Should I invest in the FTSE 100 or FTSE 250? appeared first on The Twelfth Magpie.
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