Picture Supply: Getty Photographs
In the long run, the US S&P 500 The index works very effectively. That is an 89% enhance over the previous 5 years in comparison with 51% within the UK FTSE 100 index.
To this point, nevertheless, in 2025, the UK index has overwhelmed its US friends, up 11% towards 8%. It is a modest achievement, but it surely’s all the identical outperformance.
On prime of that, the S&P 500’s dividend yield is 1.2% decrease than the three.3% that Footsy at the moment gives.
So, can the FTSE 100 proceed to do higher than its US counterpart?
I am nonetheless bullish on FTSE 100
The FTSE 100 is on observe. Definitely this 12 months we now have reached a number of new all-time highs.
Nonetheless, it continues to look cheaper than the S&P 500 and trades at a cheaper price and return ratio.
Once more, the long-term progress outlook does not appear that thrilling and will justify the S&P 500’s larger score. All 5 largest corporations within the US usually are not the 5 FTSE 100 and usually are not the tech giants.
This may assist clarify the stronger efficiency of the UK index to date this 12 months. Some tech shares undergo from an unsure enterprise surroundings within the AI context, and are already mixed with excessive scores. However it additionally raises the query of the place traders who deal with long-term progress wish to see.
Nonetheless, I proceed to see the FTSE 100 as a doubtlessly good worth providing. This may proceed to carry out strongly on a relative foundation, relying on what means S&P 500 outcomes and investor belief within the coming months.
I purchase particular person shares
However that does not imply I am plowing up spare money into the FTSE 100 tracker fund.
I feel the index might transfer additional upwards, however fairly than shopping for the index, I am selecting to put money into particular person shares.
That is as a result of I feel not solely do there are potential bargains, however there are additionally seemingly costly shares within the FTSE 100. So I choose to deal with particular person shares which can be seen as potential bargains.
Did I make a mistake?
To this point, the strategy has supplied quite a lot of outcomes.
For instance, I purchased it from the promoting large. WPP (LSE: WPP) The inventory value fell after tensions over enterprise efficiency. The important thing threat is that AI replaces a lot of what the promoting trade is doing, damaging income and income.
The provisional outcomes for WPP right this moment (August seventh) have been hardly comfy. The provisional dividend has been halved, and the inventory value has fallen to its lowest degree in 16 years.
So is that this FTSE 100 nonetheless a price entice?
If AI is definitely destroying that enterprise, that could be true. However I doubt the rating. I feel the corporate’s shopper relationships, giant artistic workforce, and lengthy expertise in promoting are all aggressive benefits that assist defend lots from AI.
Based mostly on that, I feel it continues to look doubtlessly cheap from a long-term perspective regardless of the dangers.