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During the last five years, the total return from the FTSE 100 – including price appreciation and dividends – has been 83.68%. That’s the equivalent of 12.93% a year, and far better than anyone could hope to achieve in a savings account.
And while part of the return is the result of a post-pandemic bounceback, there’s a lot more to it than this.
What the FTSE 100 does well
In one sense, there’s no magic to the FTSE 100 performance. The largest UK businesses that meet the qualifying requirements automatically become part of the index.
That means it isn’t a matter of judgement when one stock replaces another. It’s just to do with its market value and how that compares to other companies.
This might sound like a weakness – it means there’s no scope to be greedy when others are fearful by buying stocks that are out of fashion. Actually however, it’s a big…
