Uncover the Surprising 2024 Returns of the FTSE 100 and FTSE 250 (with dividends included!)

The stock market can be a fascinating world for investors to navigate, especially when it comes to tracking major indexes like the FTSE 100 and the FTSE 250 in the UK. These indexes are widely followed by British investors through tracker or index funds, offering exposure to some of the country’s biggest companies. Wondering how these indexes fared in 2024? Let’s dive into their total returns for the year, which includes gains and dividends.

The Numbers

Recently, FTSE Russell released a report detailing the performance of the FTSE UK series in 2024. The results were quite intriguing. The FTSE 100 saw a total return of 9.7% for the year, marking its strongest performance since 2021 when it boasted an 18.4% return. Meanwhile, the mid-cap FTSE 250 delivered a slightly lower return of 8.1%, yet it was also its best showing since 2021 with a 16.9% return.

Insights and Reflections

As we analyze these figures, a few key points come to mind:

1. Respectable Performance: Both indexes showcased respectable performances in 2024 in line with the historical average of stock market returns ranging from 7%-10% annually.
2. Global Diversification: The disparity between the UK indexes and major US indexes like the S&P 500 and Nasdaq 100, which achieved significantly higher returns, emphasizes the importance of global diversification for investors to potentially enhance wealth creation.
3. Dividend Impact: Dividends played a critical role in the overall performance of these indexes, significantly boosting their returns.
4. FTSE 250 Underperformance: The FTSE 250’s underperformance relative to the FTSE 100 was notable, underscoring the impact of a domestic focus versus global revenues, highlighting the need for global diversification.

Building a Global Portfolio

Embracing a global perspective when investing can be easily achieved today. Consider exploring options like the iShares Core MSCI World UCITS ETF (LSE: SWDA), providing exposure to diverse stocks across countries like the US, UK, Japan, Australia, France, and Germany. This ETF, with holdings in companies like Apple, Microsoft, and Amazon, offers access to top-tier businesses.

In terms of performance, this ETF delivered a solid 18.7% return in 2024 (in dollar terms) and sustained a 5-year average return of 11.2%. However, investors should remain cautious of potential risks such as high exposure to the US market (about 74% currently) and currency fluctuations that may impact returns for UK investors.

Considering this ETF as a core holding alongside select individual stocks like Nvidia or Uber could provide a strong foundation for a well-rounded portfolio with potential for long-term growth and returns.

Embrace global opportunities, diversify wisely, and consider the best strategies to achieve your investment goals in the dynamic world of stock markets.