Cash in on mid-cap property potential with Royal London

Royal London's UK Mid Cap Growth Fund (ISIN: GB00B4V70S51) will give you the exposure you need to do this. It's a first-quartile performer over one, three and five years and has performed well in March, with housebuilders Persimmon and Barratt Developments, as well as builders' merchant Travis Perkins, benefiting from the help granted to the housing market in the most recent Budget. The government has promised £3.5bn over three years.

Fund manager Derek Mitchell is confident the pick-up in the property market is an indicator that the UK will follow the fortunes of the US economy, which gathered momentum following its recent property recovery. "When people's houses rise in value, people feel more confident to go out and spend money on the high street - and when people start funnelling their money back into business it's great for the economy."

Mr Mitchell is also keen on consumer goods companies related to the housing market and is almost 8 per cent overweight in them. For example, he's invested in Dixons retail on the basis that if more people are buying houses, then they're also going out to buy new TVs and sound systems to equip them with.

His darling stock of the moment is estate agent Countrywide, which he bought in March at £3.50 per share. It has risen to £5 per share in the short space of time since. However, if the property market continues to bubble away he won't increase exposure as he claims to have the ideal amount already.

Of course, if the housing market falls flat on its face this fund will suffer - and Mr Mitchell admits this is the biggest threat to the fund. It's consistently outperformed its benchmark (FTSE 250 Index) but has lagged over a one year period, falling towards the bottom of the top quartile.

So why mid caps? Because they have the best and most varied exposure to consumer goods and property companies, while large caps tend to gravitate towards financials, oil and pharmaceuticals, which he does not believe will lead the market. And whereas the top 10 stocks in the FTSE 100 make up 47 per cent of the market cap of the whole index, the 10 meatiest stocks in the FTSE 250 make up just 11 per cent, giving a more balanced spread.

At the heart of Mr Mitchell's management style is his belief that in order to have a micro view you must first have a macro view. He identifies what is currently driving, and what will drive, the global economy and says it is key to selecting the right sectors and companies. This explains why he says he'd be nervous if the UK housing market or economy fell backwards or stagnated - as it would be a bad omen for the UK in his eyes.

Mr Mitchell has a strong record and a convincing strategy that has generated a consistent and robust performance - and with a total expense ratio (TER) of 1.44 per cent it looks reasonable value, coming in slightly cheaper than the average for the sector (1.48 per cent). But its real potential will only be realised if home buyers keep flocking to the market, so if you believe 'Help to Buy' is the start of a bull run for property companies, buy this fund.

ROYAL LONDON’S UK MID CAP GROWTH FUND (ISIN: GB00B4V70S51)

Source: Morningstar