Stock Market

£5,000 invested in the FTSE 100 index over the past ten years is now worth…

After years of inefficiency, the FTSE 100 The index suddenly came to life. Not only that, but its total return of 27.7% over the past year surpasses that from S&P 500 (about 13%).

Over five years, the return is also very good – 61.1% before dividends.

But what about the 10-year return? How much would someone have if they invested £5,000 in the FTSE 100 over the past ten years? Let’s find out.

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Impressive returns

Over the past 10 years, the FTSE 100’s total annual return has been 10.1%. The total return includes dividends and capital gains.

Therefore, an FTSE 100 index tracker would have turned £5,000 into around £13,000. Good.

Many of these benefits have recently occurred, the index finds approx 40% in just two years. A large part of this has been global investors looking to diversify away from the US stock market for three main reasons.

The first is President Trump’s unexpected announcements and policies. Another thing that boosted the FTSE 100 is its immunity to AI disruption – it’s full of cheap non-tech stocks that pay good dividends.

Only about 1% of the index is officially classified as information technology. Most of them consist of banks, miners, oil majors, and pharma giants. These are not in a sense threatened by AI, and should benefit from it.

Source: iShares

In other words, the FTSE 100’s lack of technology exposure – long seen by many as an Achilles’ heel – has quickly turned into a strength. By contrast, tech is worth more than 30% of the S&P 500, which helps explain the sudden departure in performance.

Finally, the FTSE 100 is still cheap, at least compared to the S&P 500.

So, is the FTSE 100 still worth considering for the next 10 years? I think so, and investors can look iShares Core FTSE 100 UCITS ETF (LSE: CUKX).

This version is an accrual ETF, which means that profits are automatically reinvested back into the fund. The trailing yield is currently around 3.1%, but earnings growth prospects look strong for the FTSE 100.

In accordance with AJ Bellpre-tax profits across the index by 2026 could exceed £231bn. This should emphasize dividends and share buybacks, which in turn have helped increase the value of many companies by making them more profitable on a per-share basis.

Looking at the top of the FTSE 100, I see a few firms that should be bigger in the next decade. These include HSBCwith a strong position across fast-growing Asia, and an oncology giant AstraZeneca.

Rolls-Royce and has a bright future, with opportunities for growth across civil aviation (the growing international travel modes), defense, and small modular reactors (SMRs). The stock is expensive right now, but this is not that important within a tracker fund (as it is one of many).

At the moment, I am sure that miners will become more valuable in the future. Due to the increased demand for copper and the lack of new mines, there is expected to be a shortage of red metal supplies.

The FTSE 100 is home to mining giants such as Antofagasta, Glencore, Rio Tintoagain Anglo American.

While a sudden swing away from value to growth is a risk for the FTSE 100, I think the ETF is worth considering for long-term investors.

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