Are you backing British? Why investors are choosing the FTSE 100

British investors at eToro are feeling positive about the prospects of the UK economy and the FTSE 100. Here’s why they’re so confident.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Big Ben and the Union Jack

Image source: Getty Images.

It’s always great to get behind the country, whether for sporting occasions or simply helping out a neighbour! And right now, it looks like British investors are backing the UK economy and the FTSE 100.

Here’s why investors are feeling positive about the country’s financial prospects and tips for how you can get involved in a possible British investment revival.

[top_pitch]

What do UK investors think about the economy and the FTSE 100?

According to a recent survey from multi-asset trading platform eToro, British investors are confident in a resurgence in the economic might of the UK.

The survey results show that most Brits are positive about the short-term outlook for the FTSE 100 index:

  • 27% think the index will grow over the next year
  • 33% say they are unsure about how it will perform
  • 30% believe it will be range-bound (plus or minus 5%)
  • 10% reckon it will fall

Of those who see gains on the horizon, 23% believe the FTSE 100 can reach up to 15% higher and 4% predict an even bigger surge beyond that.

On top of this, 53% of British investors state they are ‘quite’ or ‘very’ confident about how the UK economy would perform over the next year.

Why are UK investors feeling confident about the FTSE 100?

It’s probably worth chalking up some of the positivity to home bias. Most of us prefer to be optimistic rather than bash our own country.

Unintended consequences of the coronavirus pandemic and Brexit have also drawn the country together in some ways. Whether you were a Brexit supporter or not, it’s the situation we’re now in. So we might as well pull together!

Outside of these wider issues, investors with keen eyes will have spotted that the UK markets are undervalued when compared to some other countries, like the US. Sure, we don’t have as many exciting tech companies on our shores, but we do have a lot of solid money-making businesses.

However, some of the biggest players in the FTSE 100 are companies in areas such as energy, mining and finance. These are sectors that may see a big shake-up over the coming years.

It’s also worth pointing out that international respondents weren’t so keen on the landmark British index!

[middle_pitch]

Are there any other reasons to invest in UK markets?

Aside from those looking at value investing, there’s one other big advantage of investing in the UK: dividends. You could say that Britain is the financial Queen of dividends.

Ben Laidler, global markets strategist at eToro, reiterates why backing British can be a good bet. He explains: “While the FTSE 100 may not be ‘sexy’, there are plenty of world-class firms listed in London and the sort of companies that should do well in an economic recovery like we’re in at the moment.

“Plus, it’s also worth remembering that UK firms tend to pay good dividends, which is particularly important if you are nearing retirement or you are relying on your portfolio to pay you an income.” 

How can you invest in the UK economy and the FTSE 100?

If you see a brighter future for Britain and want to invest to reap some of the rewards, it’s a straightforward process to get started. We’ve even got a guide for investing in the FTSE 100 if that’s your jam.

But if you prefer to pick out individual stocks, you can do this using a share dealing account. One major benefit of being a British investor is getting to use a stocks and shares ISA, where your gains will be protected from tax. So, make sure you’re using everything available to help you succeed.

We’re all hoping for a British investing renaissance. But it’s important to understand there are no guarantees when it comes to investing, and you may get out less than you put in. So always invest wisely and be clear about any risks you’re taking.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

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