With UK equity valuations now at a 40% discount to developed markets, and UK mid-caps also trading at a 21% discount to their 20-year average P/E, analysts at Investec talked up the "significant attractions for the contrarian investor" of investing in this area.
"The UK is struggling to escape pariah status with institutional investors reducing exposure at an increasingly alarming rate, with mid-caps seemingly the epicentre," said Alan Brierley in a note to clients on Wednesday.
Against this backdrop, the analyst called to mind the words of Howard Marks (more than likely referring to the Oaktree Capital boss not the Welsh drug smuggler who wrote Mr Nice), "that most things prove to be cyclical, and some of the greatest opportunities for gain and loss come when investors forget this."
Brierley said he believes this advice holds true in the situation for the JPMorgan Mid Cap Investment Trust PLC (LON:JMF).
"Looking forward, a highly experienced manager with an effective process and attractive valuations are solid foundations, while the prospect of falling interest rate expectations, as inflation finally turns, could be the catalyst for an improvement in fortunes," he said in the note.
For the JPMorgan Mid Cap trust, the past 15 months have seen some stabilisation after a brutal 40%-plus tumble from late August 2021.
"Looking forward, we have confidence in the philosophy and process, and highlight the significant value added by stock selection over the long term, and here the inefficiencies in the market pricing of the mid cap sector represent a fertile environment for the manager."
The portfolio includes the likes of Dunelm, JD Sports, Bank of Georgia, Ashtead and 4Imprint.
The trust has an "attractive, well-covered dividend", while much of the last financial year has seen the discount trade within a relatively narrow discount range of 12-15% despite the company buying 4.4% of its own shares during the year.