After years of underperformance, the FTSE 100 index has suddenly burst into life. Not only that, but its 27.7% total return over the past year dwarfs that from the S&P 500 (around 13%).
Over five years, the return is also very good — 61.1% before dividends.
But what about the 10-year return? How much would someone have if they’d invested £5,000 into the FTSE 100 a decade ago? Let’s find out.
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Impressive returns
Over the past 10 years, the annualised total return of the FTSE 100 has been 10.1%. The total return includes dividends as well as price gains.
Therefore, a FTSE 100 index tracker would have turned £5,000 into roughly £13,000. Nice.
The vast bulk of these gains have come more recently, with the index gaining nearly 40% in just two years. A big part of this has been global investors seeking diversification away from the US stock market due to three main reasons.
The first is President Trump’s unpredictable announcements and policies. Another thing that has boosted the FTSE 100 is its relative immunity to AI disruption — it’s packed with cheap non-tech shares that pay generous dividends.
Only around 1% of the index is officially classified as information technology. Most of it consists of banks, miners, oil majors, and pharma giants. These aren’t in theory threatened by AI, and should even benefit from it.
In other words, the FTSE 100’s lack of tech exposure — long been seen by many as its Achilles’ heel — has quickly become a strength. By contrast, tech accounts for more than 30% of the S&P 500, helping explain the sudden departure in performance.
Lastly, the FTSE 100 is still quite cheap, at least compared to the S&P 500.
So, is the FTSE 100 still worth considering for the next 10 years? I think so, and investors could look at the iShares Core FTSE 100 UCITS ETF (LSE:CUKX).
This version is an accumulating ETF, which means dividends are automatically reinvested back into the fund. The trailing yield is currently around 3.1%, but the income growth prospects look strong for the FTSE 100.
According to AJ Bell, pre-tax profits across the index in 2026 could exceed £231bn. This should underpin dividends and share buybacks, which have also helped boost the value of many companies by making them more profitable on a per share basis.
When I look at the top of the FTSE 100, I see a few firms that should become larger over the coming decade. These include HSBC, which has a strong position across fast-growing Asia, and oncology giant AstraZeneca.
Rolls-Royce also has a bright future, with growth opportunities across civil aviation (rising global travel trends), defence, and small modular reactors (SMRs). The stock is pricey right now, but this matters less inside a tracker fund (as it’s just one of many).
Meanwhile, I’m convinced that miners will become more valuable in future. Due to surging demand for copper and the lack of new mines, there’s expected to be a supply deficit for the red metal.
The FTSE 100 is home to mining giants like Antofagasta, Glencore, Rio Tinto, and Anglo American.
While a sudden rotation away from value to growth is a risk for the FTSE 100, I think the ETF is worth considering for long-term investors.
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