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The FTSE 100 and the FTSE 250 are closely-followed UK inventory market indexes. A number of British traders have publicity to them by way of tracker/index funds.
to know the way these indexes carried out in 2024? Right here’s a take a look at their whole returns for the yr (good points plus dividends).
The figures
Earlier this week, FTSE Russell revealed its factsheet for the FTSE UK collection. And the efficiency figures have been fascinating.
For 2024, the FTSE 100 delivered a complete return of 9.7%. This was its greatest efficiency since 2021 when the large-cap index returned 18.4%.
As for the mid-cap FTSE 250, it delivered a decrease return of 8.1%. Nonetheless, this was additionally its greatest efficiency since 2021 when it returned 16.9%.
Some observations
these figures, I’ve a number of ideas.
First, the indexes produced respectable performances in 2024. Over the long run, the inventory market tends to return round 7%-10% a yr on common. Final yr, each indexes delivered that type of return.
That stated, these figures are slightly disappointing relative to the chances different main inventory market indexes managed. Over within the US, the S&P 500 delivered 25% in whole. In the meantime, for the Nasdaq 100 it was 25.9% (each of those are calculated in greenback phrases). This reveals the significance of diversifying globally when investing in shares. By taking a world method, a British investor may have doubtlessly generated extra wealth.
Second, dividends performed a big function in these figures. I calculate that in worth phrases, the FTSE 100 rose 5.7% for the yr whereas the FTSE 250 climbed 4.7%, so dividends boosted total efficiency considerably.
One other takeaway is that the FTSE 250 underperformed the FTSE 100 by an honest margin. Clearly, the home focus of the FTSE 250 harm its efficiency. Whereas FTSE 100 corporations are likely to have extra international revenues, FTSE 250 corporations are sometimes extra centered on the UK. Once more, this highlights the significance of world diversification.
Constructing a world portfolio
It’s price mentioning that it’s very simple to construct a world portfolio right now.
One easy choice to think about is a world tracker fund such because the iShares Core MSCI World UCITS ETF (LSE: SWDA). With this exchange-traded fund (ETF), one will get publicity to about 1,400 shares from a variety of nations together with the US, the UK, Japan, Australia, France, and Germany.
Amongst these shares are names comparable to Apple, Microsoft, and Amazon. In different phrases, it presents entry to world-class companies.
When it comes to efficiency, this ETF returned 18.7% final yr (in greenback phrases), which is superb. Over the five-year interval to the tip of 2024, it delivered a return of 11.2% a yr. These figures don’t embody buying and selling charges and platform prices although. And as all the time, previous efficiency isn’t an indicator of future returns.
It’s price mentioning that there are some dangers to think about with a product like this. One is that it has quite a lot of publicity to the US market (about 74% at present). One other is that it trades in US {dollars}. So GBP/USD fluctuations can have an effect on returns for UK traders.
I feel this ETF may very well be an ideal basis to think about for a portfolio although. I like the concept of getting this as a core holding after which shopping for some high-quality particular person shares comparable to Nvidia or Uber to try to enhance long-term returns.