The FTSE All-Share index is widely regarded as the best measure of overall UK stock market performance. Often used as a benchmark by professional fund managers, it includes FTSE 100 and FTSE 250 stocks as well as a bunch of UK small-cap stocks.
Has it delivered good returns over the long term? Let’s find out. Here’s a look at how much money I’d have today if I’d put £20k into a FTSE All-Share tracker fund 10 years ago.
Tracking the UK market
There are quite a few FTSE All-Share trackers on the market today. I’m going to analyse the performance of the SPDR FTSE All Share UCITS ETF (Acc) (LSE: FTAL).
The reason I’m going to look at this one is that it has been around longer than many others. Additionally, it’s an ‘accumulation’ ETF, meaning it reinvests all dividends (a large part of total returns).
Looking at its performance figures, it delivered a return of 5.7% a year for the 10 years to the end of June. So I calculate that had I invested £20k between the start of July 2014 and the end of June 2024, I’d now have about £35k. Note that I’m ignoring investment platform fees and trading costs here.
Near-6% returns
Is that good? Well, it’s not bad. A near-6% a year return’s much higher than I would have picked up from cash savings. Remember, until about mid-2022, savings accounts were paying a maximum interest rate of about 1%. So investing my money (instead of keeping it in cash savings) would have paid off.
That said, it’s not a brilliant return. I could have done a lot better with other investments.
For example:
- £20k in a global tracker fund such as the iShares Core MSCI World UCITS ETF would have turned into about £65k
- £20k in a S&P 500 tracker such as the iShares Core S&P 500 UCITS ETF would have grown into around £87k
- £20k in Apple shares would have shot up to around £275k
- £20k in Amazon shares would have ballooned into around £320k
Note that all these figures include currency movements.
Investing for strong returns
For me, the key takeaways here are that it can pay to:
- Take a global approach to investing
- Add some high-quality individual stocks to a portfolio in an effort to obtain higher long-term returns
Let’s say that instead of putting £20k into a FTSE All-Share tracker fund, I’d gone with this mix instead:
- £10k in a global tracker
- £7k in a FTSE All-Share tracker
- £1.5k in Apple shares
- £1.5k in Amazon shares
I calculate in this scenario, I’d now have just under £90k. I’d be very happy with that.
Of course, I’m cherry-picking stocks here. Not every one has performed like Apple or Amazon over the last decade. A lot of shares have produced disappointing returns.
And holding onto a winner for the long term isn’t easy. It can be very tempting to take profits when a stock doubles or triples.
But this calculation really shows the potential of investing in a mix of index funds and stocks. If you’re looking for the next Apple or Amazon, you’ve come to the right place.
