The FTSE 100 and the FTSE 250 are closely-followed UK stock market indexes. A lot of British investors have exposure to them via tracker/index funds.
Interested to know how these indexes performed in 2024? Here’s a look at their total returns for the year (gains plus dividends).
The figures
Earlier this week, FTSE Russell published its factsheet for the FTSE UK series. And the performance figures were interesting.
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For 2024, the FTSE 100 delivered a total return of 9.7%. This was its best performance since 2021 when the large-cap index returned 18.4%.
As for the mid-cap FTSE 250, it delivered a lower return of 8.1%. However, this was also its best performance since 2021 when it returned 16.9%.
Some observations
Looking at these figures, I have several thoughts.
First, the indexes produced respectable performances in 2024. Over the long term, the stock market tends to return around 7%-10% a year on average. Last year, both indexes delivered that kind of return.
That said, these figures are a little disappointing relative to the percentages other major stock market indexes managed. Over in the US, the S&P 500 delivered 25% in total. Meanwhile, for the Nasdaq 100 it was 25.9% (both of these are calculated in dollar terms). This shows the importance of diversifying globally when investing in stocks. By taking a global approach, a British investor could have potentially generated more wealth.
Second, dividends played a large role in these figures. I calculate that in price terms, the FTSE 100 rose 5.7% for the year while the FTSE 250 climbed 4.7%, so dividends boosted overall performance significantly.
Another takeaway is that the FTSE 250 underperformed the FTSE 100 by a decent margin. Clearly, the domestic focus of the FTSE 250 hurt its performance. While FTSE 100 companies tend to have more global revenues, FTSE 250 companies are often more focused on the UK. Again, this highlights the importance of global diversification.
Building a global portfolio
It’s worth pointing out that it’s very easy to build a global portfolio today.
One simple option to consider is a global tracker fund such as the iShares Core MSCI World UCITS ETF (LSE: SWDA). With this exchange-traded fund (ETF), one gets exposure to about 1,400 stocks from a range of countries including the US, the UK, Japan, Australia, France, and Germany.
Among these stocks are names such as Apple, Microsoft, and Amazon. In other words, it offers access to world-class businesses.
In terms of performance, this ETF returned 18.7% last year (in dollar terms), which is excellent. Over the five-year period to the end of 2024, it delivered a return of 11.2% a year. These figures don’t include trading fees and platform charges though. And as always, past performance isn’t an indicator of future returns.
It’s worth pointing out that there are some risks to consider with a product like this. One is that it has a lot of exposure to the US market (about 74% currently). Another is that it trades in US dollars. So GBP/USD fluctuations can have an impact on returns for UK investors.
I think this ETF could be a great foundation to consider for a portfolio though. I like the idea of having this as a core holding and then buying some high-quality individual stocks such as Nvidia or Uber to try and boost long-term returns.
