Here’s how much money you could have made by investing £20,000 in the FTSE 250

How much money have FTSE 250 investors made over the last 20 years? Zaven Boyrazian demonstrates how some have turned £20,000 into £1.8m!

| More on:

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.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Mature people enjoying time together during road trip

Image source: Getty Images

As the UK’s flagship growth index, the FTSE 250 has historically delivered significantly larger gains compared to the more popular FTSE 100 over the long run. That’s not entirely surprising given that small and medium-sized businesses have more room to grow.

So, just how much money have investors made over the years with this index?

Crunching the numbers

The long-term average performance of the FTSE 250 is approximately 11% per year since its inception. That means anyone who put £20,000 to work back in 1992 now has roughly £742,000. However, for those who invested at a later date, the annualised returns haven’t been as impressive.

More recently, smaller businesses have struggled compared to larger established enterprises, given their dependence on the UK economy. And it’s no secret that Britain’s economic growth hasn’t exactly been gangbusters of late. As such, the growth index has struggled to keep up with its historical momentum.

Investment DateTotal ReturnAnnualised ReturnPortfolio Value
5 Years Ago+49.3%8.3%£30,244
10 Years Ago+70.4%5.5%£34,621
15 Years Ago+240.3%8.5%£71,253
20 Years Ago+394.8%8.3%£104,587

Maximising returns

While achieving a near-8% return over the last 15 to 20 years is hardly anything to scoff at, it pales in comparison to what some FTSE 250 stocks have achieved during that time.

Take Ashtead Group (LSE:AHT) as a prime example to consider. Today, investors know it as a leading FTSE 100 equipment rental business serving industries such as the construction and utilities sectors. But back in September 2005, it was still a young enterprise that had just crossed the milestone of joining the FTSE 250 index.

Investors who saw the potential of the young equipment rental market and put £20,000 to work in Ashtead shares, reinvesting dividends along the way, have gone on to earn jaw-dropping returns. In fact, long-term shareholders have reaped a ginormous 5,845% gain. That’s the equivalent of a 22.7% annualised return – enough to transform £20,000 into £1.8m!

Still worth considering?

With so much growth under its belt, it’s unrealistic to expect Ashtead to deliver another near-6,000% gain over the next two decades. After all, that would make it one of the largest businesses in the world with a market cap of over £1.2trn.

Nevertheless, the business still has some strong tailwinds at its back. The secular demand for construction equipment in North America, particularly as the US invests heavily in revamping its national infrastructure, paves the way for strong long-term demand. And while higher interest rates have caused several large-scale projects to be delayed, that might soon start to change now that the Federal Reserve has begun cutting rates.

Of course, this also highlights the cyclical nature of this business. Over the last four years, Ashtead shares have remained pretty flat due to its high dependence on the non-residential construction sector. And with competition heating up, there’s growing concern of potential pressure on its profit margins due to weaker pricing power.

The bottom line

Ashtead continues to be a top-notch enterprise in my mind – just not one that is likely to deliver another round of transformative gains. And while they’re difficult to spot, there are several companies in the FTSE 250 I suspect have the potential to deliver Ashtead-like returns over the next two decades.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Ashtead Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Front view of aircraft in flight.
Investing Articles

Is it game over for the BP share price rally?

The BP share price has looked like a one-way bet in recent weeks as oil and gas prices soar but…

Read more »

Man hanging in the balance over a log at seaside in Scotland
Investing Articles

Amid geopolitical and AI risks, here’s how I’m positioning my ISA and SIPP in 2026

Edward Sheldon explains how he's allocating capital within his investment accounts and SIPP amid the various risks to the market.

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

My game plan for the next stock market crash

Markets have been surprisingly resilient during the recent Middle East conflict but we still cannot rule out a stock market…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

1 top growth stock to consider buying after it crashed 59%

This S&P 500 growth stock has fallen off a cliff lately due to AI software fears. Our writer thinks this…

Read more »

A mature woman help a senior woman out of a car as she takes her to the shops.
Investing Articles

Here’s how a 35-year-old putting £15 a day into an ISA could end up earning £18k+ of passive income annually!

A 35-year-old with no ISA but a willingness to invest relatively small sums could one day be earning many thousands…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

With the potential to double in 10 years, this could be a dividend stock to consider buying

With a yield of 7.2%, income investors might consider buying this stock. But reinvesting the dividends could deliver even more…

Read more »

Happy couple showing relief at news
Investing Articles

How much would someone need to invest in the stock market to target a £1,250 monthly second income?

Investing in the stock market can help deliver long-term wealth. But James Beard says it can also be a way…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How much would someone need in an ISA to aim to treble the current State Pension?

Experts say the State Pension isn’t generous enough to provide a comfortable retirement. James Beard says the stock market could…

Read more »