The world is in the midst of an oil crisis. The war in Iran has thrown the markets into turmoil, with the price of oil soaring to around $100 a barrel.

The oil shock has repercussions that are far wider than just the price of petrol. In this episode of MoneyWeek Talks, editors Kalpana Fitzpatrick, Andrew Van Sickle, and Cris Sholto Heaton make sense of what is happening now, explain where the crisis could go next, and what you should do to protect your portfolio. Tune in now on YouTube or on most podcast platforms.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

By European stock market standards, the size of the SpaceX initial public offering (IPO) will be breathtaking. The company is expected to be valued at between $1.75 trillion and $2 trillion, and given how frothy Wall Street is right now, it would hardly be a surprise if it went to a substantial premium on its first few days of trading. We can all question the valuation. The Starlink business that now provides internet access on flights is a clear money-spinner and it may be able to break into domestic broadband as well, but the plans for a colony on Mars look, to put it politely, a little optimistic. Even so, this is a huge business and a very successful one, and it has created a huge amount of value in a very short period of time.

It is far from alone. Anthropic, the company behind Claude AI, is reported to be planning an IPO in October, with a valuation of $1 trillion or perhaps more. Its rival OpenAI, the company behind ChatGPT, is also expected to list later this year, with a value of close to $1 trillion. There are slightly smaller companies just behind it. Last week, Cerebras, which makes AI chips, made its debut on Nasdaq, and after a first-day premium, saw its value soar to $95 billion. On the US market, incredible amounts of wealth are being created at dizzying speed. Anthropic is only five years old, OpenAI is ten (its profit-making unit only five) and although SpaceX was founded in 2002, it only really got going a decade ago.

The contrast with European stock markets is painful. SpaceX by itself will be worth almost as much as the whole of France's CAC-40 (valued at €2.6 trillion and falling rapidly as the value of LVMH slumps). It will be getting close to the entire value of Britain's FTSE 100, currently valued at £2.4 trillion, and SpaceX and Anthropic combined will certainly be worth more than all of the UK's 100 largest companies put together.

European stock markets need more mavericks like Elon Musk

The reason is clear. Very few new firms are being created. If you exclude mergers, the newest company on the CAC-40 is Eurofins Scientific, which was formed in 1987. Even where there are new companies, the best ones choose to list on Wall Street – the Cambridge-based chip designer ARM, for example, is now worth $220 billion, which would rank it as the third largest in the FTSE 100 if it had decided to list here.

Europe, including the UK, needs to realise how far behind it has fallen and start working out how to turn that around. First, it should radically reduce the taxes on start-ups to encourage more entrepreneurs. Britain has scaled back the break on capital-gains tax that anyone who started a new company used to benefit from, and most of Europe never had any concessions to start with. Instead, there is a constant stream of new wealth taxes and capital-gains taxes, with the Netherlands extraordinarily planning to tax capital gains before they have even been cashed in. No wonder there are far fewer start-ups and hence fewer giants ever emerge.

European stock markets should also roll back restrictions on growth industries such as AI and space. While the US has a booming space industry, Europe has a Space Act; while huge new AI businesses are created on the other side of the Atlantic, Europe is stuck with an AI Act. But there is no point in having a regulator if there isn't an industry to make rules for. There is still little sign that politicians in either Brussels or London realise how much damage has been done by trying to regulate industries before they have even begun.

Finally, Europe should relax the listing rule for entrepreneurs such as Elon Musk who want to keep control of companies. SpaceX will come in for a lot of criticism for allowing Musk so much control over the business and the $1 trillion pay package if he manages to create a thriving human colony on Mars. It doesn't follow Europe's governance rules. But so what? Entrepreneurs are often a little odd, and they are often control freaks, but they also have the drive and ambition to create huge new businesses. Europe could use fewer rules and more mavericks if it is to avoid turning into an investment backwater, with nothing more than a dull collection of very old companies.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

What force will shape the world in the next 20 years? The answer is China's drive to financialise, according to Diana Choyleva, founder and chief economist at Enodo Economics.

In this episode of the podcast, Diana speaks to MoneyWeek's Cris Sholto Heaton about how the AI race differs in China versus the West, the transformation of the country's equity market, and the breakdown of globalisation.

You can watch this episode on our YouTube channel or subscribe to it on any podcast platform.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew Van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

Hedge funds that focus on picking stocks have had a fantastic start to the year. So-called long-short equity hedge funds returned around 6.7% for the year to 14 April, before the rally in equity markets that took place on news of the ceasefire in the Middle East, according to a report compiled by Goldman Sachs. The MSCI World index gained 4.3% for and the S&P 500 3.9%.

Long-short equity hedge funds try to beat the market by taking long positions in their favourite firms and going short or betting against the companies they believe are overvalued. This is just one part of the $5.2 trillion hedge-fund sector. Because they are aimed at high-net-worth and professional investors, hedge funds can invest wherever they want and in whatever they wish to, as long as they have their investors' permission. The Andurand Commodities Discretionary Enhanced fund, for example, an energy-focused hedge fund managed by legendary oil trader Pierre Andurand, returned 31% in the first quarter of 2026, driven by bullish bets on oil markets (although it went on to lose 51% in April). Another fund, Point72 Asset Management, is what is known as a “multi-strategy” hedge fund, and trades everything from oil to interest rates, currencies and equities to earn a return. It ended March up nearly 4% despite the volatility in global markets.

The global hedge-fund industry attracted $89.3 billion in new capital over the six months to the end of March, the highest two-quarter period of inflows since 2007. “Macro” funds have been particularly popular with investors, according to the latest HFR Global Hedge Fund Industry report. These funds seek to profit from movements in financial markets driven by political or economic events and invest across all asset classes, using leverage to boost returns. Major macro firms include Bridgewater Associates, Brevan Howard, Caxton Associates and Rokos. HFR's benchmark index for these funds, the HFRI Macro (Total), returned 4.9% in the first quarter, outperforming the MSCI World index by 8.5%. Meanwhile, HFRI's fixed-income index, the HFRI Relative Value (Total), added 1.4% in the quarter, around 2.6% better than the -1.2% return for the BofA Global Broad Market Corporate bond index and 3.3% more than a broad index of UK gilts.

Hedge funds are not as exotic as they look

These returns illustrate the key reason to hold hedge funds in a portfolio: they can help fund managers and investors to reduce volatility by gaining exposure to assets they may not have the expertise or resources to trade themselves. However, most hedge funds require a minimum investment of around £100,000. Some won't talk to you unless you're willing to put up millions. What's more, to make the most of these vehicles investors tend to hold a portfolio of funds, each with a different focus. So, adequately to take advantage of the sector, investors need several million pounds. That's why the hedge funds tend to be off-limits to all but the wealthiest individual investors.

That said, UK investors do have some options. There are a number of hedge fund structured as investment trusts, as well as one publicly listed hedge fund based in London and traded on the London Stock Exchange.

In our globally interconnected financial markets, there are also options on other exchanges around the world that could be worth considering for those seeking to diversify their portfolios.

Hedge funds are often portrayed as exotic and complex, but in reality, they are very similar to the funds available to the average retail investor. A hedge fund is simply a fund formed by a group of private investors with the aim of generating a return on their investment over a set period. They often seek to achieve a positive absolute return, rather than outperform a benchmark – that is, they seek to achieve a positive return regardless of whether the broader market is rising or falling.

However, because hedge funds tend to focus on high-net-worth investors and institutions (such as pension funds), the regulations governing them are much more flexible. It's assumed that the institutions and wealthy individuals who decide to invest in hedge funds have the skills to evaluate the proposition themselves, so hedge-fund managers have much more flexibility around where they can invest and how they can invest.

There's also no obligation for hedge-fund managers to report what they hold and why they hold it. Some managers may decide to own just a handful of different assets and update investors once a year. Others may hold thousands of different investments, with teams of traders buying and selling positions every minute. Hedge funds also tend to have higher fees than the active funds available to the mass market. It's common for managers to adopt a “two and 20” structure, with a management fee of 2% a year and a performance fee of 20% of any profit, although managers will offer better terms for more important customers. While the additional fees do undoubtedly have an impact on returns over time, it ensures the managers, who often own a big stake in the fund themselves, have a strong incentive to achieve the best returns, and this level of incentive structure is something you don't usually see with active funds aimed at the mass market.

Hedge funds also frequently restrict their investors from withdrawing money. This can be helpful when using esoteric or illiquid investment strategies and managers don't want to have to deal with a large number of redemption requests in any particular period, which may force them to sell assets at a bad time. In this respect, hedge funds have a lot in common with investment trusts. Investment trusts have a fixed capital base; hedge funds can lock in their capital for a period. Some funds will require investors to commit for five years when they make an initial investment. Others may require them to submit redemption requests quarterly rather than daily. They also often reserve the right to “gate” withdrawals, or prevent investors from accessing their cash if the manager believes doing so would have a detrimental impact on investment returns.

Just like investment trusts, hedge funds can and do use leverage, or borrowed money, to enhance returns. However, this has led to disastrous outcomes in the past, when managers have borrowed too much, too quickly. One of the most notable recent examples was Bill Hwang's Archegos Capital, which imploded after borrowing $160 billion against just $20 billion in capital. The funds collapse wiped out Hwang's $20bn net worth overnight and ultimately led to the collapse of global investment bank Credit Suisse. In another example, in the first quarter of 2021, Melvin Capital, run by Gabe Plotkin, lost about $4.5 billion, or 49% of its assets, in a few weeks, betting against GameStop using borrowed funds. The fund survived only after receiving a $2.5 billion bailout, although it closed for good a year later.

Hedge fund managers are only human

Hedge funds have attracted plenty of criticism over the years, mainly on the issue of fees. A study published in February 2020, “A Bias-Free Assessment Of The Hedge Fund Industry”, found that between 2013 and 2019 hedge-fund managers created up to $600 billion in value added, before fees. Net of fees, the figure was significantly lower. In fact, one study of 22 years' worth of hedge fund data, also published in 2020 (“The Performance Of Hedge Fund Performance Fees”), found that fees consumed 64% of the gross returns on investors' capital over the long run.

Hedge-fund managers would, of course, argue that they deserve higher fees because they outperform the market. And that is true to a certain extent. But they are also only human. Another study published in May 2011, “Higher Risk, Lower Returns: What Hedge Fund Investors Really Earn”, found that although a hedge-fund portfolio's buy-and-hold return between 1980 and 2008 came in at 12.6%, higher than the S&P 500's total return of 10.9% over the same period, the dollar-weighted annual return, accounting for investors' inflows and outflows, was just 6% a year. This shows that, although most hedge-fund investors are far richer than the average investor, they're still subject to psychological biases. Indeed, Morningstar's latest Mind the Gap report revealed that the average investor lost 1.2 percentage points annually over the past decade due to poor timing of purchases and sales. Multiple studies have reached the same conclusion.

Focusing on this performance in isolation misses the point, however. Hedge funds and alternative strategies should only be used as part of a portfolio to provide diversification and help smooth long-term returns. Hedge fund Universa Investments is one of the best examples of what a hedge fund or alternative strategy can provide. Universa specialises in risk mitigation against “black swan” events – that is, unpredictable and high-impact drivers of market volatility. To this end, it employs a bespoke combination of credit-default swaps (a form of credit insurance on corporate debt), stock options and other derivatives to bet on market movements. The fund is highly secretive, but Universa reportedly manages $20 billion and posted a 100% return on capital when Donald Trump unveiled his sweeping tariffs last April. It reportedly earned 4,000% in March 2020 when the pandemic broke out.

Universa is far from the only fund that has used this approach to make enormous profits. Bill Ackman's Pershing Square hedge fund earned $2.6 billion during the pandemic after paying $26 million to acquire a portfolio of credit-default swaps, which then soared in value by more than 10,000%. These trades don't come around very often, which is why it can pay to have a manager focused on finding opportunities.

Wealthy individuals and companies that invest in hedge funds will do so as part of a broadly diversified portfolio. This helps reduce the risk of volatility, erosion of returns by fees and any individual hedge-fund blow-up. Insurers typically allocate between 3% and 10% of their funds to hedge funds and other alternative assets, while public pension funds allocate up to 12% on average, according to figures compiled by Goldman Sachs and the French bank BNP Paribas. University endowments can take larger positions, primarily because they have a much longer-term focus.

Endowments allocate 15%-40% of their assets on average to long-short, event-driven and emerging-market hedge funds. Family offices, which can also take a longer-term view, also tend to have a higher allocation, although typically capped at around 25% on average, according to research.

One of the world's most active hedge-fund investors is the Canada Pension Plan Investment Board (CPPIB). This $714 billion fund has been investing in and backing new hedge-fund managers for years and it's accumulated a $76 billion portfolio of internally and externally managed funds. According to the fund's 2025 annual report, its strategies have delivered $15.6 billion above its benchmark in net added value over the past five years, mainly due to external fund allocations.

Hedge funds for the average investor to buy

While most hedge funds are off-limits to the average investor, the UK is actually uniquely positioned in having a number of publicly traded hedge funds available for individuals to buy and sell on the London Stock Exchange. Two of these are in the FTSE 100: Pershing Square Holdings (LSE: PSH), and the world's largest publicly traded hedge fund, Man Group (LSE: EMG).

Pershing Square was listed in London in 2017 and is run by Pershing Square Capital Management, founded in 2004 by Bill Ackman. It's not an exact copy of the parent firm's fund, but rather a selection of the best ideas. The fund aims to hold eight to 12 core holdings (although a total of 15 holdings are currently listed), bundled up within an investment-trust structure. That means it's available to smaller investors and has the added benefit of an independent board of directors that provides oversight and ensures their representation. The trust has a typical hedge-fund fee structure, with an annual management fee of 1.5% and a performance fee of 16%. Management would argue that the returns have more than justified the high fees. Since its inception in 2012, the fund has produced an annualised return in terms of net asset value of 11.8% compared with 6.5% for the FTSE 100 in US dollar terms. Holdings currently include Uber, Amazon, Google and Meta.

Man Group runs a range of investment products operating under a variety of investment strategies. Its main options come under its computer-driven trading arm AHL, and they've performed particularly well this year. In the three months to the end of March, its AHL Alpha fund added 5.7% and AHL Dimension returned 5.6%. Man Strategies 1783 notched up a 3.8% return. Thanks to this positive performance in a quarter defined by volatility, assets reached $228.7 billion in the three months through March, up from $227.6 billion at the end of 2025. Buying shares in Man Group won't give investors direct access to its underlying strategies, but will provide exposure to the firm's income stream. For the year to 24 April, shares in the hedge fund returned 11.6% and over the past five years produced a total annualised return of 13.8%.

Another London-based option for investors is BH Macro (LSE: BHMG). This investment trust has just one investment: units of the Brevan Howard Master Fund, one of the world's largest and most successful macro hedge funds. This trust is designed to provide investors with a strategy to diversify away from equity markets. Since the first half of 2007, there have been 20 significant market drawdowns where the US S&P 500 index has fallen by 5% or more. In 17 of these 20 periods, BH Macro's net asset value actually increased. In October 2008, for example, when the S&P 500 fell by more than 15%, the fund's net asset value rose by several percentage points. The fund, with its 150 portfolio managers and traders, has achieved an annualised return of 8.5% since inception, with less volatility than in broader equity markets.

Another option is Tetragon Financial (LSE: TFGS). This trust owns a portfolio of private businesses, hedge funds, credit, real estate and bank loans. Its net asset value has risen 612% since its inception in early 2007, nearly double the MSCI All Country World index. It charges a performance fee of 25% and an annual management fee of 1.5%.

Blackstone (NYSE: BX) is one of the world's largest publicly traded asset managers. It was founded in 1985 and started life as a private equity and mergers and acquisitions shop and has since expanded into real estate, private credit, fund management and even hedge funds. The $1 trillion asset manager is leading the charge in bringing hedge funds to high-net-worth individuals with the Blackstone Multi-Strategy Hedge Fund, known as BXHF, which plans to start trading this year. According to Bloomberg, the fund will invest about 30% of its assets in other hedge funds as well as make its own investments. It will charge a 1.25% management fee and take a cut of 12.5% of profits once it earns at least a 5% return. Blackstone could be one of the best ways to invest in the booming market for alternative assets, offering diversification across multiple sectors.

There are limited options for investing directly in hedge funds and hedge-fund managers, but investors can use a selection of investment trusts to build exposure to alternative assets and diversify their portfolio themselves. For example, BioPharma Credit (LSE: BPCR), an offshoot of Pharmakon Advisors, one of the world's largest specialist biotechnology funds, lends directly to biotechnology companies and yields 7.5%. The trust has a near-spotless lending record.

Elsewhere, the TwentyFour Income Fund (LSE: TFIF) and TwentyFour Select Monthly Income (LSE: SMIF) focus on trading collateralised loan obligations and mortgage-backed securities to generate a high single-digit annual dividend for investors. These funds are highly specialised vehicles, but can help diversify portfolios.

On the credit side, there's also CVC Income and Growth (LSE: CVCG). This investment trust is managed by the private-equity giant CVC and holds a portfolio of senior secured loans acquired for yield and value. Once again, the trust could provide investors with diversification during turbulent times.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Charles Jillings, co-fund manager of Utilico Emerging Markets Trust, discusses the outlook for emerging markets and the long-term investment opportunities in infrastructure and utilities.

In this episode of MoneyWeek Talks, Andrew Van Sickle speaks to Charles about how emerging economies are dealing with Donald Trump's tariffs, the after-effects of the war in Iran, and why countries like Brazil and the Philippines are overlooked markets.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew Van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

Shell, BP, HSBC, AstraZeneca, British American Tobacco – nobody's idea of an exciting portfolio.

Yet a study of every UK-listed stock over the past 50 years found that the top ten wealth creators, including these five, captured nearly a third of all the real wealth generated by UK stocks. Thousands of listings came and went in that time. These stayed and compounded, and also sometimes feature in the most popular stocks purchased by DIY investors.

This makes the current anxiety about market concentration worth examining. The Magnificent 7 now account for 39% of the S&P 500. Passive fund assets have passed 50% of all US equity fund assets for the first time.

In his January 2026 shareholder letter, Terry Smith warned that the shift into index funds is 'laying the foundations of a major investment disaster', though he conceded he couldn't say when or how it would end.

It's an argument that resonates. When seven stocks dominate a major index, something feels uncomfortable. But three recent studies, covering UK and US equities over periods from 50 years to nearly a century, tell a different story. Wealth creation has always been concentrated in a tiny minority of companies. The question isn't whether your index is top-heavy. It's whether the alternative gives you better odds.

And on that, the evidence is striking.

Which UK stocks created the most wealth?

Only three per cent of UK stocks created all the wealth. A newly published, peer-reviewed study in the Journal of Asset Management quantifies what many investors suspect but few grasp in full. Jonathan Fletcher and Michael O'Connell at the University of Strathclyde examined every stock listed on the London Stock Exchange, the Unlisted Securities Market and AIM between 1975 and 2024. Their finding: just 3.1% of those companies generated all of the market's aggregate net wealth creation in real terms.

The names that did the heavy lifting won't surprise anyone. Shell, BP, HSBC, British American Tobacco, AstraZeneca, Rio Tinto, GlaxoSmithKline and Unilever – dull yet dependable.

The top 10 alone captured nearly a third of all aggregate wealth created. These weren't the stocks that made headlines; they were the ones that compounded quietly while the headline stocks came and went.

More than half of all UK stocks failed to beat Treasury Bills over their lifetimes. The median stock lost money after inflation: a lifetime real return of −13.9%. AIM, the market segment most associated with exciting growth stories and tax-efficient wrappers, produced negative aggregate net wealth of −£2.6 billion.

This isn't a UK anomaly. Hendrik Bessembinder at Arizona State University, whose 2018 study first documented the pattern in the US, has updated his data through 2022. Across nearly a century of American equities, just 4% of stocks accounted for all $55 trillion of net shareholder wealth creation. The remaining 96% collectively matched Treasury Bills at best.

Two different markets. Two different time periods. The same conclusion: equity wealth creation has always been radically concentrated. The few carry the many.

So when only 3% of stocks generate all the aggregate wealth, today's top-heavy indices aren't a distortion. They reflect how markets work. And if you're picking individual stocks, you're betting you can identify those winners before the fact, from a pool where the median outcome is a loss.

Avoiding market concentration actually made things worse

If concentration is structural, what happens when you try to fight it? Mark Kritzman of Windham Capital Management and MIT Sloan and David Turkington of State Street Associates set out to answer that in their recent paper - The Fallacy of Concentration.

They built a dynamic strategy that reduced equity exposure whenever market concentration was historically high and increased it when concentration fell. The result: lower returns, higher risk and less than half the cumulative wealth of staying invested.

The buy-and-hold investor earned a Sharpe ratio of 0.52. The concentration-avoider earned 0.39. Both held the same average equity exposure over the full period, at 67.8 per cent. The difference wasn't about courage or conviction. It was about fighting a feature of the market that turns out not to be a bug.

Large companies aren't just large. They're structurally less volatile. Kritzman and Turkington found that the biggest decile of S&P 500 stocks had annualised volatility of 19.2 per cent, compared with 28.8 per cent for the smallest. A market dominated by large companies is, counterintuitively, a calmer one.

Smith is not wrong that passive flows direct money mechanically toward the biggest stocks. That's how cap-weighted indexing works. But whether that mechanism exists matters less than whether the concentrated index is more dangerous than the concentrated stock-picking portfolio. On that, the evidence is clear.

Buy the whole book

The Fletcher and O'Connell data leaves stock pickers with an uncomfortable question. If the vast majority of listed companies destroy value over their lifetimes, picking individual stocks looks less like a skill contest and more like a raffle. The rational response isn't to study the tickets harder. It's to buy the whole book.

Terry Smith, of course, would disagree. But his own record is instructive. Fundsmith returned 0.8% in 2025 against 12.8% for the MSCI World - Smith’s fifth consecutive year of underperformance.

Laith Khalaf, head of investment analysis at AJ Bell, noted that the fund has now lagged its benchmark over both five and 10 years.

Khalaf's wider point is worth hearing too: “Fundsmith's earlier outperformance was partly flattered by the low interest rate environment that suited Smith's quality style. Now that tailwind has reversed, the structural headwinds facing stock pickers are harder to ignore.”

None of that reflects on Smith's intelligence or his process. It reflects the odds, and those odds don't bend for reputation.

Market concentration is worth understanding. It's worth watching. But the evidence from three studies spanning two markets and close to a century of data points the same way: the risk most investors should worry about isn't a top-heavy index. It's a portfolio that bets against the 3 per cent carrying everything else.

For most of us, the better odds are hiding in plain sight.

What is stopping the UK from investing? It's a mixture of three main factors, according to Henry MacLeod, co-head of digital distribution at BlackRock.

In this episode of MoneyWeek Talks, Kalpana Fitzpatrick speaks to Henry about the state of investing in the UK, how we can debunk myths about risk, and whether AI can help you become a better investor.

Watch the full episode on our YouTube channel or on any podcast platform.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew Van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

A decade ago, advertisements for spread betting firms were ubiquitous. The industry promised simple, tax-free access to financial markets, with a large amount of leverage. However, it quickly became clear that for many people, spread betting is unwise.

After several cases of ordinary investors on the hook for hundreds of thousands of pounds, regulators cracked down, increasing the amount of cash that customers had to pay up front. Shares in spread betting firms plummeted, and took a long time to recover. However, recently the industry has enjoyed a revival.

One big winner from the upswing is IG Group (LSE: IGG). At the start of 2025, the shares were still trading below levels seen in August 2016, but over the past few months, they have surged by 50%. The company has successfully changed its business model to offer a much wider range of products, including traditional broking and investing services for ordinary investors, in addition to complicated, high-margin derivatives for wealthy ones.

What's new at IG Group

IG Group's CEO Breon Corcoran, who joined two years ago from money transfer business WorldRemit and had two years with Paddy Power Betfair under his belt, has also helped cut costs. He has pushed IG into new areas such as products based around the booming area of cryptocurrencies. Even though crypto is now widely deemed a mainstream asset, many investors would still prefer to buy it through a trusted provider, even if the fees are higher.

Meanwhile, with attitudes to gambling becoming much more liberal in the US, IG Group is thinking about expanding there, including a potential move into prediction markets (featuring bets on world events), and is even rumoured to be considering swapping its listing for one in the US, which should boost its share price. All these plans should help the company maintain the track record that saw sales jump by nearly two-thirds between 2020 and 2025. Earnings per share also grew by nearly the same amount during the same period. Margins have been strong, with a consistent return on capital employed (ROCE) of roughly 20%, far above the cost of capital.

IG Group also has a large amount of cash on its balance sheet, with little debt. All of this makes the fact that it trades at only 11.3 times 2027 earnings, with a dividend yield of 3.5%, seem a bargain.

Given these strong prospects, it should be no surprise that IG Group is one of the best performers in the FTSE 100, rising by more than a third in the past six months. What's more, it has continued to outperform the market over the last one and three months, and trades well above both its 50-day and 200-day moving averages. I therefore recommend going long at the current price of 1,444p at £2 per 1p. In that case I would put the stop-loss at 1,000p, giving you a total downside of £888.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

UK small-cap stocks haven't had an easy ride in recent years. With shifting interest rates and the outlook for the economy looking uncertain, many investors have gravitated towards the perceived safety of larger, more global companies instead. Look a little closer and a different picture emerges.

Across the UK small-cap market there are businesses continuing to grow steadily, strengthen their financial positions and build momentum. In many cases, this progress is being driven by long-term trends that are less dependent on the ups and downs of the wider economy. From infrastructure to healthcare and specialist services, these companies are benefiting from structural sources of demand that can support growth even in more challenging conditions.

The key is identifying those with the right foundations: scalable models, strong balance sheets and clear competitive advantages. The following three companies offer a good illustration of this.

Three UK small-cap stocks for your portfolio

Quartix Technologies (LSE: QTX) provides subscription-based vehicle-tracking systems that help small and medium-sized businesses monitor their fleets, then use that data to optimise routes and improve drivers' behaviour, helping to reduce costs and improve efficiency. The appeal for customers is that installation costs are quickly recouped through fuel savings and improved productivity, creating a clear and tangible return on investment. This supports strong customer retention as well as a dependable stream of recurring revenue.

With about 330,000 vehicles already connected to its platform and a growing international presence, Quartix has established a solid base, but there is still plenty of room for growth, especially outside the UK, where adoption remains relatively low. Its scalable, cloud-based platform and reputation for reliability and customer service give it an edge in a fragmented market.

Construction may not always seem like a predictable industry, but parts of the sector are underpinned by long-term government infrastructure spending, rather than short-term economic cycles. Galliford Try (LSE: GFRD) sits firmly in that camp, operating across areas such as schools, healthcare and water infrastructure.

Much of its work is tied to regulated, multi-year investment programmes, which provide strong visibility over future revenues and a steady project pipeline. In recent years, the firm has also become more selective in the work it takes on, helping smooth earnings and control risk. It has a strong balance sheet and is well placed to benefit from investment in public services.

Applied Nutrition (LSE: APN) is a UK-based sports nutrition and health company, which produces a range of wellness products, from protein powders to supplements. The business is vertically integrated, meaning that it makes the majority of its products in-house, giving it greater control over quality and costs.

Demand from health-conscious consumers is growing and the firm's ability to innovate and secure shelf space with key retailers has been an important driver of performance. The firm is well placed to build on this momentum, supported by a scalable model and exposure to a fast-growing market.

UK small-cap stocks are neglected, but that's often when the most interesting opportunities appear. Over time, small firms tend to grow faster than larger ones. Looking beyond the headlines and focusing on companies that are steadily improving can highlight opportunities others may be missing.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Europe has lagged behind the US for years now, but what would it take for the continent to recover?

Daniel Avigad, manager of the TM Lansdowne European Special Situations fund, speaks to MoneyWeek's Andrew Van Sickle about opportunities in European equities, solving the continent's growth problem, and the consequences of populism.

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Legal & General Group (LSE: LGEN) is one of the oldest companies in the UK. It's also one of the few remaining that formed part of the FTSE 100 at the time of its inception. The group is known among investors as a slow-and-steady beast that pays a consistent, relatively high dividend yield, but hardly does anything to get the pulse racing. That is starting to change as Legal & General transitions towards an asset-light, higher-margin, faster-growth business.

Legal & General's longevity is down to its business model: life insurance and long-term savings. It is one of the largest retirement, life-insurance, and annuity providers in the country, operating under strict rules to ensure management runs the business prudently with a long-term mindset.

This means the business is relatively boring compared with other blue chips – boring, but not unprofitable. Legal & General throws off cash and has established itself as one of the UK's top income stocks, with a yield consistently in the high single digits.

Usually, such a high dividend would be a warning sign. Yields significantly higher than the market average usually indicate that investors believe the payout is unsustainable. In this case, however, the high yield and low valuation are more a reflection of the market misunderstanding the business model.

Legal & General is a dominant leader in the bulk-purchase annuity market and the largest provider of term life insurance in the UK. Both of these products are financially complex, involving multi-decade liabilities and, as a result, are heavily regulated.

There are strict rules governing how much capital the company must hold to meet its liabilities. Even for the most sophisticated financial analysts, determining how much revenue a bulk-annuity purchase or a term life-insurance product will generate over ten or 20 years is not straightforward.

You only need look at the firm's peers to understand this isn't a problem affecting only Legal & General. Chesnara, Standard Life (formerly Phoenix) and Just Group are all cheap and offer high yields. The problem is so bad that private-equity group Brookfield recently offered a 75% premium to buy Just. Standard Life has also decided to rename the company to focus on its more visible pension products, moving away from the old Phoenix brand, which was known as a closed-book consolidator.

This isn't just a problem in the UK. In the US, Brighthouse Financial (originally spun off from MetLife in 2017 to focus on retail life insurance) was acquired last year for a 55% premium. Athene was acquired by private-equity giant Apollo in 2022 for a 20% premium. Athene-backed Athora is in the process of acquiring the UK's Pension Insurance Corporation for £5.7 billion.

Jackson Financial, formerly the US arm of London-listed Prudential, spun off in 2021, has been so neglected that management has been able to acquire 40% of the outstanding shares in the past five years from cash flow as well as distributing a handsome dividend.

Times are changing, and so is Legal & General

Legal & General is becoming increasingly less reliant on its bulk-annuity, pension-buyout and life-insurance businesses. Instead, its asset-management and retail arms are driving an increasing share of profit. With £1.2 trillion of assets under management, Legal & General is one of the UK's largest investment-management firms.

It manages the funds attached to the defined-contribution (DC) pension schemes it manages, funds for international clients and a growing portfolio of private assets. Its private-market assets grew from £57 billion to £75 billion last year, which helped the overall fee margin on assets under management rise from 8.8 basis points to 9.1.

The group's workplace defined-contribution pension platform will be a key driver of growth going forward. According to the Pensions Policy Institute, the aggregate value of private-sector workplace assets could grow from around £1.2 trillion in 2025 to around £2.2 trillion in 2045, or £4.4 trillion in a best-case scenario. There will also be significant consolidation among the major players. By 2035, the market is projected to comprise only 15 to 20 large DC “mega-funds”, down from more than 60 providers today.

Legal & General's workplace DC assets under administration rose 21% to £114 billion in 2025. Net flows totalled just £6.2 billion. But management believes workplace saving is now the group's “core customer acquisition engine” and the group expects £40 billion to £50 billion in net flows by 2028. The group's retail arm includes annuities, lifetime mortgage and retail insurance products.

Other revenue streams also suggest the business is firing on all cylinders. In the institutional retirement arm, the group has flagged a contractual service margin (CSM) of £12.4 billion, up 2% year on year. This is the unearned income the group is forecasting it will generate from its book of annuities – equivalent to roughly 214p per share, net of tax.

Management announced a £1.2 billion share buyback alongside the company's 2025 results – the largest in the group's history – on top of a 2% dividend hike. Total cash returns this year will come in at £2.4 billion, with management saying it expects £5 billion of shareholder returns from 2025 to 2027, 35% of the company's market value.

Based on these projections, shares are trading at a total shareholder yield of 16.7% for 2026 and a historical price-to-earnings (p/e) ratio of 11.9, although this does not account for long-term profit-generation potential, as highlighted by the group's forecast CSM. Legal & General is continuing its transition to a cash-generative, asset-light business. Investors should take note.

Rupert Hargreaves owns shares in Legal & General

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Since at least the summer of last year, a large part of the financial commentariat has been waiting for the bubble in US AI stocks to burst.

Instead, something stranger is unfolding. In recent weeks, some leading technology names have suffered heavy sell-offs (Microsoft and Amazon are both off 17% since late January).

Yet AI continues to make progress.

Investors are beginning to seriously consider the implications of a world disrupted by the technology. Their conclusion? Today’s winners might become tomorrow’s laggards.

Software firms – first victims of the AI apocalypse

Those seeking to understand the success of US tech over the past 15 years need only consider the economics of software.

While developing a software product can be expensive, the marginal cost of shipping extra units is virtually zero. This makes software as a service (SaaS) ludicrously profitable.

Last year, Microsoft boasted gross margins of 68%. For comparison, supermarket Tesco’s gross margin is about 7%.

In 2011, venture capitalist Marc Andreessen declared that “software is eating the world”. Now AI is threatening to eat software.

On 5 February, start-up Anthropic launched the latest edition of its Claude Opus chatbot.

Highly capable at coding, it had been used to create a professional platform that performs basic legal analysis.

The implication is clear. If AI tools allow companies to create their own enterprise software in-house, why would they need to keep paying top dollar for a team of Silicon Valley software engineers to do it for them?

A major sell-off followed – dubbed the “Saaspocalypse”. The S&P North American Technology Software index has lost 30% of its value since the start of October.

Amplified by debt concerns, the world’s most profitable business model suddenly looks like one of the riskiest.

London’s small club of data-led firms wasn’t spared.

Everything from logistics to wealth management sold off as investors searched for new AI victims.

Yet despite the rout, the wider US market is flat for the year. Why? First, not all tech is in the doghouse.

Google is thought to have an AI edge because of all its data.

Hardware suppliers such as SanDisk and Western Digital remain in hot demand.

Second, some old-economy stocks are enjoying a lift.

Energy and commodity firms stand to gain from the data-centre build-out.

Industrials might be better positioned to pocket the gains of AI than the tech firms themselves.

Supported by the tailwind of an ageing population, healthcare is growing at a solid clip. If the rotation trend holds, then the FTSE, which is infamous for its “dinosaurs”, might just be set for a revival.

Yet uncertainty is rife. It will be a long time before we get a clear idea of the real winners and losers from AI disruption, says Jim Reid of Deutsche Bank. “That leaves plenty of room for investors’ imaginations… to run wild.”

Expect a volatile year with lots of “big sentiment swings” ahead. As for investors, remember that, “as with all disruption, opportunities will abound”.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Fund inflows are on the rise but investors remain cautious and are seeking value, industry data shows.

Investors have had a tough time navigating financial markets in recent months with concerns about Autumn Budget tax rises as well as speculation about an AI bubble.

This uncertainty meant investors were cagey about putting too much money into funds for much of the second half of 2025 but there appears to have been a turnaround in November.

Investors placed £530 million into funds in November, the strongest month since May 2025, new figures from the Investment Association (IA) show.

The inflows coincided with the 2025 Autumn Budget but are a marked improvement on 2024’s fiscal update, which saw substantial outflows of £5.7 billion during October.

This suggests concerns around potential tax changes including restrictions to pension tax free lump sums that never materialised in the Budget had subsided, the IA claims.

But investors still appear cautious, with consistent outflows across equities, as withdrawals totalled £2.9 billion, while money market and fixed income funds remain in favour.

Domestically, funds investing in UK equities recorded the smallest outflows since May 2025 at £453 million against the backdrop of the FTSE 100 Index closing 2025 at record highs.

Tracker funds saw relatively low inflows of £233 million, while active funds recorded their highest inflow in six months at £297 million.

Miranda Seath, director, market insight and fund sectors at the IA, said: “November’s data signals a notable shift in investor sentiment, with funds returning to inflows for the first time in six months, as anticipation ahead of the Autumn Budget helped investors to piece together the likely tax changes ahead of November 26th.

Here is where investors are putting their money.

The most popular fund sectors

Money market funds saw inflows of £1.4 billion during November 2025.

The Short Term Money Market sector was the best-selling IA sector in November with inflows of £1.3 billion.

Seath suggested that the high inflow to short-term money market funds reflected expectations from retail investors that the cash ISA limit would be reduced.

Mixed asset funds also attracted £659 million in November, their biggest monthly inflow since April 2025.

Equity funds remain in the red, but UK outflows slow

Equity outflows slowed in November to £2.9 billion, according to the IA’s data.

The figure is down from outflows of £5 billion in October 2025.

However, all regions continued to record outflows from equity funds.

Investors took £943 million out of global funds and £640 million from North America, reflecting concerns about artificial intelligence (AI) and technology stock valuations.

This is still an improvement on October’s data though when outflows from global and North America funds reached £2.4 billion and £859 million respectively.

Continuing uncertainty over US trade tariffs saw £401 million of outflows from Asia-focused funds, but sentiment towards UK equities showed signs of stabilisation.

The IA figures show the region recorded its smallest outflows since May at £453 million.

The IA said: “This stands out against a backdrop of persistent risk-off behaviour and ongoing outflows from global equities, suggesting that investors may be reassessing the UK market’s prospects and reflect a growing recognition among retail investors of the UK’s value proposition."

It comes as the FTSE 100 closed 2025 with a 26% gain.

In contrast, the S&P 500 returned 10% in sterling terms over 2025, which may be helping to draw investor attention to UK equities.

The IA said: “The FTSE’s strong performance appears to have positioned the UK as an increasingly attractive alternative to the US, particularly as concerns mount over valuation bubbles and concentration risk in major American technology firms.

“UK stocks are seen as good value with more room to grow, in contrast to some US market stocks where valuations are very high, leading to concerns about an AI-driven bubble and a US market correction. Investing in the UK is also a good way of diversifying away from the US and managing equity risk in portfolios and UK investors may be waking up to this after favouring European stocks earlier in the year.”

Diversification for fixed income sectors

Investors returned to fixed income in November 2025 with inflows of £1.1 billion compared with outflows of £62 million a month before.

Inflows were led by £360 million going into the Mixed Bond sector, £262 million into Strategic Bond and £117 million into UK Gilts.

Outflows from government bonds also eased to £11 million, the IA said.

The Global Emerging Market Bond sector also marked its seventh consecutive month of inflows, attracting £100 million in November.

The IA said this suggests investors are looking to diversify beyond traditional developed markets and reflects a drive to diversify away from US dollar assets.

The trade body added: “This resurgence reflects a growing appetite for diversification across the asset class, as retail investors sought to balance risk across a range of fixed income sectors.”

Seath said: “As we enter the new year, 2026 has so far been marked by the US deposition of Nicolas Maduro in Venezuela, a country with significant oil reserves.

“Even as immediate market reactions, particularly in oil, have been relatively contained, in this environment of growing uncertainty over the geopolitical ramifications of the US’ actions, households and savers are likely to continue favouring‑ a cautious approach. Diversified allocations over the long-term can look through near-term volatility as market and political dynamics evolve.”

Did you buy shares in Legal & General, Rolls-Royce or Nvidia this year?

If so, you were in good company. According to analysis from AJ Bell, these were the three top stock picks for DIY investors throughout the whole of 2025 (from 1 January to 2 December) based on net flows through its DIY investor platform.

While hot-button themes such as defence and artificial intelligence (AI) caught investors’ attention, the reliable income of dividend stocks also appealed throughout an unpredictable year for the markets.

Legal & General (LON:LGEN) – the highest-yielding stock in the FTSE 100, with a dividend yield of 8.6% as of 8 December – was the most popular stock among DIY investors on AJ Bell throughout 2025.

“Sectors come in and out of fashion, but income stocks tend to rank highly on investors’ shopping lists every single year. The UK stock market is a rich hunting ground for dividend payers,” said Dan Coatsworth, head of markets at AJ Bell.

On the other hand, some investors took a more futuristic perspective and invested in stocks that will power the technology of the future.

Three quantum computing companies – IONQ (NYSE:IONQ), Rigetti Computing (NASDAQ:RGTI) and D-Wave Quantum (NYSE:QBTS) – were among the ten stocks that saw the greatest percentage change in the number of eToro's UK investors holding them over the course of 2025.

“The outlook improved for the quantum computing sector in 2025,” said Lale Akoner, global market strategist at eToro. “While the sector is still high-risk and long dated, contract wins such as Rigetti’s which announced landmark purchase orders, including a $5.8 million contract with the US Air Force, helped anchor valuations in the sector.”

Akoner added that “fundamentals, rather than hype, are starting to drive performance” in the quantum sector, which was adding to retail investor interest.

As you decide where to invest for 2026, take a look back on the top stocks of 2025.

The most popular UK stocks of 2025

While L&G took top spot, there was a mix of themes and sectors in the top UK stocks of 2025.

These included defence stocks like second-place Rolls-Royce (LON:RR.) and fifth-placed BAE Systems (LON:BA.) as well as financial stocks like Aviva (LON:AV.), HSBC (LON:HSBA), M&G (LON:MNG) and Phoenix Group (LON:PHNX).

^{Based on £ net flows on AJ Bell’s DIY investor platform from 1 Jan 2025 to 2 Dec 2025}

“AJ Bell customers showed a strong preference for UK shares, the opposite to many other investors given Investment Association figures show steady net outflows from UK equity funds during the year,” said Coatsworth.

Of AJ Bell’s ten most popular stocks across all markets in 2025, seven were UK-listed.

Read more on the best- and worst-performing FTSE 100 stocks of the year in our explainer.

The most popular US stocks of 2025

Given stretched valuations and unpredictable policy moves, 2025 saw a tendency for investors to take money out of US markets for much of the year, though in early December the S&P 500 appeared to have overtaken the FTSE 100’s returns for the year.

Unsurprisingly, AI stocks dominate the most-bought US-listed stocks.

Every Magnificent Seven stock besides Apple made the top ten most-bought US stocks on AJ Bell this year, with Nvidia (NASDAQ:NVDA) and Tesla (NASDAQ:TSLA) taking the two top spots.

^{Based on £ net flows on AJ Bell’s DIY investor platform from 1 Jan 2025 to 2 Dec 2025}

“When something as big as AI is splashed all over the news, discussed constantly in the workplace, and embedded into devices like phones and laptops, it’s no wonder that people think there is money to be made,” said Coatsworth.

Which stocks were the most widely-held at the end of 2025?

Besides quantum computing companies, data on the stocks held by eToro’s UK users showed a big increase in European defence stocks, particularly Germany’s largest defence firm Rheinmetall (Frankfurt:RHM) which saw a 334% increase in the number of investors holding the stock on eToro last year.

“The combination of clearer policy direction, and multiyear spending programs have improved earnings visibility for the sector,” said eToro’s Akoner. “Companies like Rheinmetall and BAE Systems have benefited from lucrative, multi-year contracts, reducing cyclicality and supporting the investment case for long-term investors.”

^{Source: eToro}

The knock-on effect of this in terms of the most-held stocks across eToro users was that Rolls-Royce moved one-place up the list.

^{Source: eToro}

While Apple and Nvidia also climbed one place, the companies that made up the top ten most-held stocks list were the same at the end of 2025 as at the end of 2024.

Investing seems complex when you first start, but picking the right investment funds for beginners can make it much more straightforward, and give you an easy on-ramp to building your wealth over the long term.

So if you’re wondering how to begin investing, picking out one or two top funds could be a great place to start.

“Investing is a measured and long-term process,” says Rob Morgan, chief investment analyst at Charles Stanley. “It involves taking risk but doing so in a way that minimises and mitigates it, to more reliably harness the growth available across global economies and individual companies.”

Investment funds are a particularly good option for beginners because they offer a convenient way to manage the level of risk you’re taking. Investing in a fund spreads your money, and therefore your risk, across dozens of different companies.

There are funds for almost any type of investment, from sustainable funds that can grow your wealth while making a positive impact, to AI funds that track the world’s most cutting-edge technology.

Investment funds explained for beginners

There are several types of funds, including:

• Open-ended funds;
• Closed-ended funds (or, more commonly, ‘investment trusts’);
• Exchange-traded funds (ETFs).

Each has its advantages and disadvantages. But the simplest and most relevant for beginner investors are ETFs.

An ETF is a fund that trades as a single share on a stock exchange. Its price changes while stock markets are open in line with changes in the price of the assets it tracks. You can buy and sell it in a stocks and shares ISA, just as if it was a stock.

There are ETFs for almost everything, but beginners might be particularly interested in ETF index funds. These track a specific index, such as the UK’s FTSE 100 or the US’s S&P 500.

“If you’re not sure which companies you wish to own, you may want to consider a tracker fund, or an ETF,” says Claire Exley, head of advice and guidance at J.P. Morgan Personal Investing. “These will allow you to hold a small amount of, for example, every company listed in the FTSE 100.”

Index funds are usually low-cost: because they just track an index, there’s not much to pay by way of management fees.

Best of all, they usually outperform more active stock-picking strategies. AJ Bell’s December 2025 Manager versus Machine report found that only 20% of actively-managed funds (IE, those where the manager decides when to buy and sell stocks, rather than just tracking an index) outperformed a passive alternative over the last five years.

Three types of investment funds for beginners to consider

If you are drawing up a shortlist of the first funds to add to your investment portfolio, investment platform AJ Bell breaks the available fund universe down into three categories in terms of the kinds of investments they make.

Global equity tracker funds

Funds that track the global stock market are a great way to get started in investing without having to decide on any specific region or industry.

“These funds provide low-cost exposure to companies around the world, with representation from a wide range of sectors,” said Dan Coatsworth, head of markets at AJ Bell.

Four of the best-known global equities (another word for ‘stocks’) indices are MSCI World, MSCI All Country World, FTSE World and FTSE Developed World. Tracker funds following these indices should register the same price movements (or very close to them) over any given timeframe.

Some of the most popular global stock tracker funds on AJ Bell’s platform are:

Source: AJ Bell, based on net flows from 13 April 2025 to 12 April 2026

Global bond tracker funds

If you’re looking for a more cautious approach to getting started in investment funds, you could look at bond funds instead.

“When shares fall, bonds often fall less and recover faster, helping to smooth the overall investment journey,” said Coatsworth. “That might suit someone in their 40s or early 50s approaching retirement, those already in retirement, or more anxious individuals.”

There are typically three types of bond that bond funds invest in – corporate bonds, government bonds (such as gilts) or a combination of the two (these are known as strategic bond funds).

Some popular bond funds for beginner investors on AJ Bell are:

Source: AJ Bell, based on net flows from 13 April 2025 to 12 April 2026.

Multi-asset funds

Most portfolios combine bonds and equities, as well as other types of asset. You can do this yourself by buying funds specialising in different investments, but a more convenient approach is to buy a multi-asset fund which acts as a self-contained portfolio in its own right.

“The more cautious you are, the greater the proportion you might want in bonds,” said Coatsworth. “However, there’s such a thing as being too cautious. Those with time to ride out the ups and downs of the stock market might want to avoid having too much in bonds as a proportion of their overall portfolio given the returns might be much lower than a more equity-weighted portfolio.”

Six funds for beginners

With input from Charles Stanley’s Morgan, we’ve picked out six investment funds for beginners, which we’ve shared below.

Fidelity Index World

Risk level: medium-high

A low-cost, cheap tracker fund is a great starting point to gain exposure to a market or sector, giving you convenient ownership of all or most of the companies that make up that market’s index.

Fidelity Index World is a good fund for beginners to consider because it provides a convenient tracker for the global stock market.

Personal Assets Trust

Risk level: medium-low

Personal Assets Trust (LON:PNL) is a multi-asset investment trust that sets out primarily to avoid losing money in inflation-adjusted terms (making it a less risky investment compared to funds that are more concerned with growing wealth than preserving it).

The portfolio comprises four main asset types: equities, bonds, cash and gold.

This has proved a resilient combination. The returns from each of these asset classes tend to rise and fall independently of one another, meaning that it can hold up even in changing market conditions.

Vanguard LifeStrategy Funds

Risk level: variable

The advantage of this multi-asset fund range is that it has several different funds, each with a different risk profile, so investors can select the one that best suits them.

Interactive Investor includes three in its quick-start fund range for beginner investors: 20% Equity, 60% Equity and 80% Equity, though the full range also includes 40% and 100% equity options. The remainder of the portfolio is invested in bonds.

As a rule of thumb, the higher the percentage of equities, the higher the risk profile, and the higher the potential returns.

Royal London Short Term Money Market Fund

Risk level: low

Money market funds invest your money as if it was cash, but they tend to generate returns just above the Bank of England base rate.

Interactive Investor includes Royal London’s Short Term Money Market Fund in its quick-start range, and characterises it as very low risk. This is a very cautious option: your investment is very unlikely to fall in value with a money market fund, but it’s also unlikely to grow much beyond inflation.

M&G Global Dividend

Risk level: medium-high

Dividends are the payments that companies make to their shareholders. Ultimately, it is dividend payments – or the expectation of future dividend payments – that gives shares their value.

M&G Global Dividend harnesses the power of dividend stocks, with a global perspective. It holds a wide variety of companies and could be of particular interest to investors seeking a rising income from their investments.

Scottish Mortgage

Risk level: high

Scottish Mortgage (LON:SMT) is one of the best-known investment trusts for innovation-led growth investing.

Morgan believes that anyone taking a long-term approach to investing should consider investing in a fund that looks for long-term growth through technological innovation. Their long-term perspective ought to let them ride out short-term volatility and reap the long-term rewards.

Scottish Mortgage invests in private companies like Elon Musk’s SpaceX or TikTok owner ByteDance, as well as those listed on global stock markets, offering opportunities that are otherwise hard for beginner investors to access.

Shares in Wise, formerly TransferWise, have gained over 12% this morning (5 June) as the payments business looks set to be the latest high profile company to depart London’s stock market.

When Wise (LON:WISE) listed in London in 2021 at an £8 billion valuation, it was seen as a coup for the market. Then-prime minister Rishi Sunak had actively sought to encourage global technology companies to list in the capital.

Wise shares gained 35% since its initial listing to reach a market cap of £11.05 billion as of yesterday’s close. Following this morning’s share price moves Wise is now worth over £12 billion.

But London’s share of this value looks set to diminish, as Wise shares are set to be dual-listed in London and the US.

“Today we are announcing our intention to dual list our shares in the US and UK,” Kristo Käärmann, co-founder and CEO of Wise, said in its annual results released today. “We believe the addition of a primary US listing would help us accelerate our mission and bring substantial strategic and capital market benefits to Wise and our Owners.”

Wise is now worth over £12 billion based on this morning’s moves, from a little over £11 billion yesterday. However, the news that is seeking a dual listing compounds the momentum for London’s stock exchange exodus.

“A secondary listing will remain in London, but a dual listing makes the company ineligible for FTSE 100 inclusion,” explains Matt Britzman, senior equity analyst at Hargreaves Lansdown.

Wise dual-listing follows on from London exodus

Wise is the latest in a string of companies to have signalled their pessimism towards London’s stock market.

Last month, news broke that Shein preferred Hong Kong to London, dashing hopes that the City could land a blockbuster £50 billion listing.

Mining giant Glencore (LON:GLEN), a stalwart of the FTSE 100, suggested in February that it could move its primary listing to New York in a bid to maximise its valuation. London’s struggles to attract domestic companies to list go back to chipmaker ARM’s decision to list in the US and beyond.

The challenge for the London market is a perceived lack of interest among UK investors. Analysis from Aberdeen in January showed UK retail investors have the lowest level of exposure (as a percentage of wealth) to equities of any G7 company, at just 8% (outside of pensions). That compares to 33% for US investors.

“Keeping a presence in London makes sense, but it does little to sugar coat the fact that yet another London-listed tech firm is looking across the Atlantic for better valuations – a story that’s becoming all too familiar,” said Britzman.

For Wise in particular, there would also be a commercial advantage to be gained by listing in the US. “These include helping us drive greater awareness of Wise in the US, the biggest market opportunity in the world for our products today,” said Käärmann, as well as giving Wise access to “the world's deepest and most liquid capital market”.

Which fintechs could list in London?

Losing one of its largest publicly-listed fintech companies would undoubtedly be a blow for the London Stock Exchange.

Looking ahead though, there is a string of fintechs that could revive London’s IPO market by listing in the capital.

Among these are Monzo, which is still reportedly deciding between London and New York. CEO TS Anil downplayed talk of an imminent IPO following blockbuster results on 2 June, but with revenue having jumped 48% to £1.2 billion, speculation is mounting as to when (and where) the company, valued at £4.5 billion last year, will list.

ClearScore, the London-based credit scoring app, is also putting groundwork in to list within the coming years, and CEO Justin Basini strongly favours a London listing.

Basini doesn’t necessarily view the larger size of the US market as an advantage. “While you still get all the international investors looking at IPOs in London, the attention you get at a smaller market capitalisation is much greater [than in the US],” he told MoneyWeek in February.

Wise annual results

While Wise’s plans to list shares in the US have grabbed the headlines, there were further positives in its results that have driven Wise stock higher this morning.

Revenue increased 15% year-on-year to £1.2 billion while underlying operating profit rose 13% to £296.9 million. Post-tax profits increased 18% to £416.7 million, putting diluter earnings per share at 39.73p.

Underlying free cash flow rose 1534.7% to £332.7 million.

This isn’t the first time the stock markets have gone into turmoil and it won’t be the last, but it is understandable that investors may be feeling tarrif-ied right now as the market turbulence continues.

While seasoned investors know too well this is a case of ‘keep calm and carry on’, recent news over the impact of Trump tariffs may have even the most thick-skinned investors jumping out of their skin.

Headlines shouting “FTSE plunges”, “S&P 500 sheds millions” or “stock market meltdown” can be understandably nerve wracking.

Worse still, we are not over the worst yet with a trade war possibly now triggered – China today announced a 34% tariff on all US imports. But if you’re tempted to start moving things around in your portfolio for damage control, now is probably not the best time. In fact, it could damage your long-term goals.

Why should I not worry about the stock market dip?

Stock market turbulence may not seem normal, but it is in fact very common.

Remember, it was only back in 2020 when the stock market last crashed amid fears of Covid-19 spreading. At the time, we saw the FTSE 100 and S&P 500 dipping by more than 3%.

Over the last 50 years, there have been eight points where we have seen shares fall by more than 20%. But despite all this, in most cases, equities still come out well and typically give investors better returns than cash.

According to Vanguard calculations, if you invested just £100 in 1972, it would have been worth over £7,000 in 2025.

The message is: stay invested. Investing is never risk-free, but those who avoid reacting to bad news, focus on the long term and cancel out the noise, can do well.

The longer you stay in the market, the better you will do – even when the market takes a dip.

How should I invest during market turbulence?

Investing is tricky when it comes to getting it right – in fact, you should not try to time the market. Some people may try to buy during the dip as they hope they will make more money in the future.

But if you are looking for a strategy, invest regularly and consistently – no matter what the market is doing.

It’s known as pound cost averaging. This is when you pay in a set amount each month, and by drip feeding this into your investment each month, you can smooth out any volatility.

The longer you invest, the better you will do when it comes to growing your money.

Should I still get a stocks and shares ISA?

As we approach the end of the tax year, you may be feeling a little nervous about a stocks and shares ISA if you have not had one before. See our ISA guide for the types of ISAs you can have.

If you are not comfortable investing right now, you can park the money as cash in your stocks and shares ISA and decide where to invest at a later stage, or simply put your money into a cash ISA. Either way, don’t let Trump’s tariffs be the reason you do not use this year’s ISA allowance.

In the meantime, keep your finger off that investment app. Do not look!

With the spring holiday season approaching, investors may be wondering: is the stock market open on Easter? The answer to this question is: no. The UK stock market will be closed on Monday, 6 April, for Easter Monday.

The stock market is also closed on Friday, 3 April, to observe Good Friday.

Typically, UK stock market opening times are 8am to 4.30pm Monday to Friday with a small break between 12pm and 12.02pm. This can vary depending on public holidays and major events, such as Christmas Eve, when markets close earlier than usual.

Investors gearing up for the end of the tax year will need to make sure they’re ready for the big money changes in April.

But with markets getting unpredictable due to the ongoing war in Iran, investors may want to prepare their portfolio for high inflation. Check out our weekly share tips guide to get an idea of where to invest.

Below, we look at UK and US stock market opening times during Easter, and how it will impact trading on those days.

Is the stock market open on Easter?

No. The UK stock market is closed on Easter, which falls on Monday, 6 April. This is part of the eight standard holidays observed by the stock exchange in the year.

The London Stock Exchange only observes English bank holidays – not Scottish, Welsh or Northern Irish holidays. For instance, Easter Monday is a bank holiday in England, Wales and Northern Ireland but not in Scotland. It’s a non-trading day for the stock market.

The UK stock market is also shut on Friday, 3 April, for Good Friday, which means the trading will cease for four consecutive days.

We look at the key money dates for 2026 for those who want to stay on top of their finances in the new tax year.

When is the UK stock market closed in 2026?

Below is a list of UK stock market holidays to help you plan your trading activities accordingly.

Source: London Stock Exchange

When is the US stock market closed in 2026?

If you invest in US stocks, also look at the New York Stock Exchange (NYSE) and Nasdaq’s open times and upcoming holidays this year.

Both stock exchanges’ standard opening hours are Monday to Friday 9:30am to 4pm Eastern Standard Time (EST) time, which is 2:30pm to 9pm BST in the UK.

Analysts have tempered their dividend expectations slightly and now expect the FTSE 100 to pay out £78.5 billion in 2024 as a whole, according to AJ Bell’s dividend dashboard. At the start of this year, they were forecasting £79.7 billion.

While this figure isn’t too far short of 2018’s all-time high of £85.2 billion, it also means the FTSE 100 will have delivered almost no dividend growth this year compared to 2023.

UK equities could still be worth a look for income-focused investors, though.

The FTSE 100 is currently offering a dividend yield of around 3.6%. This doesn’t sound great when you consider cash savings accounts currently pay up to 4.85% – and with no investment risk.

However, this dividend yield doesn’t take other forms of cash return into consideration – such as buyback activity and takeover moves.

When these other forms of cash return are included, the FTSE 100 yields 6.5% overall.

By casting their gaze wider to include mid-cap companies as well (tracking the FTSE 350, for example), investors could potentially bolster their yield further. The FTSE 350 offers a total cash yield of 8.3%. Again, this includes buybacks and takeovers as well as dividends.

Russ Mould, investment director at AJ Bell, points out that this compares favourably to the Bank of England base rate, 10-year government bond yields and the headline rate of inflation. These are 4.75%, 4.6% and 2.6% respectively.

Of course, as well as income, equities also offer the potential for share price growth. The FTSE 100 is up around 5% year-to-date at the time of writing, but has underperformed its US and global counterparts.

UK dividend outlook for 2025

Analysts currently expect the FTSE 100 to pay out £83.6 billion in dividends in 2025, a 6.5% increase compared to 2024.

Total pre-tax income (an important indicator of a company’s financial health and ability to pay dividends) is also expected to reach £248.8 billion, according to AJ Bell.

This figure would constitute a new peak, although Mould points out that the forecast has slipped in the past three months, mainly due to weakness in oil and metal prices. This has had a knock-on effect on oil and mining companies.

Investors should also be wary of concentration risk. Just 10 companies are expected to pay out 54% of total FTSE 100 dividends in 2024. The top 20 are expected to pay 71%.

Commenting on the broader outlook and how it could translate into investor flows, Mould says: “It may be that stronger global economic growth and upgrades to earnings and dividend forecasts are required before the UK really catches investors’ imagination once more, despite its potential yield appeal.

“That appeal rests primarily on its forecast forward yield of 3.6% for 2024 and 3.9% for 2025, based on ordinary dividend payments, with £3.3 billion in special dividends on top from HSBC, Associated British Foods and Berkeley.

“Further cash returns come in the shape of share buybacks, which are nearing prior-peak levels, and takeover activity, with almost 50 UK-listed firms on the receiving end of a closed or live approach.”

Should you buy UK equities?

The domestic market offers strong income opportunities, but an important question for investors is whether they want to opt for this or buy into a market with greater growth potential.

For context, the FTSE 100 has delivered an annualised return of just over 6% over a five-year period. Meanwhile, the MSCI World has delivered 13% and the S&P 500 has delivered almost 16%.

Proponents of UK equities say they are undervalued, making them cheap compared to their global and US counterparts. To benefit from this and reap outsized share price returns, though, there would need to be a catalyst for a re-rating.

“The million-pound question is when will the market re-rate?,” say Ben Russon and Richard Bullas, co-heads of UK equities at investment firm Martin Currie. “That we cannot predict. What we do know is that the UK stock market offers incredible value; those who are invested when it finally re-rates could be richly rewarded.”

The good news is that investors are at least being paid for their patience, enjoying a decent overall cash yield in the meantime.

The FTSE 100, the UK’s flagship stock market index, made a strong start to 2026 but has stuttered in recent months following the outbreak of the war in Iran.

The index’s constituents feature consistently among the top stocks for retail investors, with household names like Rolls-Royce (LON:RR.) and Legal & General (LON:LGEN) topping the list of shares bought by investment platform Interactive Investor’s customers during April.

The FTSE 100 hit all-time highs early this year, breaking the 10,000 barrier for the first time on 2 January and peaking at just below 10,935 on 27 February.

That date, not coincidentally, marked the last trading day before the outbreak of the war in Iran. Since then, the FTSE 100 has fallen 3.9% (as of market close on 27 May), with the conflict perceived as a headwind to both the UK economy and its flagship index.

Figures released on 25 May by the British Chambers of Commerce (BCC), a trade body representing British businesses, showed that 80% of UK firms it surveyed reported an existing or expected impact from the Iran conflict.

“Higher energy bills, shipping disruption and the rising cost of raw materials are daily concerns for business,” said William Bain, head of trade policy at the BCC.

“Even if the current ceasefire soon signals the end of the conflict, the economic reverberations will be felt for many months to come,” he added.

It should be noted, though, that the UK economy and the FTSE 100 are not the same thing. FTSE 100 stocks are typically large, multinational companies whose revenue is derived mostly from overseas. As such the index’s performance isn’t necessarily correlated with that of the UK economy.

In fact, some of the largest FTSE 100 stocks are oil and gas majors that have profited from rising oil prices since the war’s outbreak.

So what are the top stocks in the FTSE 100, and should you consider investing?

The top FTSE 100 stocks by market cap

In terms of market capitalisation (market cap), these are the biggest stocks in the FTSE 100 as of 28 May:

^{Source: London Stock Exchange}

At present, HSBC (LON:HSBA) is the largest stock in the FTSE 100, followed by pharmaceuticals giant AstraZeneca (LON:AZN).

The top-performing FTSE 100 stocks of 2025

Last year the FTSE 100 gained 21%, its best year since 2009 (the recovery following the global financial crisis), when it returned 22%.

Here are the top-performing FTSE 100 stocks of 2025:

^{Source: LSEG}

Fresnillo (LON:FRES), the world’s largest silver miner, led the FTSE 100 as its share price increased more than fivefold during the year, benefitting from a 147% increase in the price of silver. Endeavour Mining (LON:EDV) and Antofagasta (LON:ANTO) also cashed in on an excellent year for precious metals.

Defence stocks like Rolls-Royce and Babcock International (LON:BAB) also made the top 10 list, alongside resurgent financial stocks like Standard Chartered (LON:STAN), Prudential (LON:PRU) and Lloyds (LON:LLOY).

Should you invest in the FTSE 100?

While UK share price gains don’t always match the explosive rates of their American counterparts, FTSE 100 shares can be a good source of dividends and close the gap in terms of total returns.

“Fundamentally, the FTSE 100 can help provide ballast to an ISA or pension portfolio, particularly as the index has a rich source of dividends and a good mix of cyclical and defensive companies,” says Dan Coatsworth, investment analyst at AJ Bell.

“Holding UK equities alongside the US, emerging markets, Europe and others may be the best way to capture emerging winners, reduce your investment risk, and benefit from global megatrends,” says James McManus, chief investment officer at J.P. Morgan Personal Investing (formerly Nutmeg).

One easy way to invest in the FTSE 100 is buying a tracker fund such as the Vanguard FTSE 100 UCITS ETF (LON:VUKE).

FTSE 100 dividend forecasts in 2025 are dipping again, pushing 2018’s all-time high of £85.2 billion out of reach until at least 2026. The index having gained 6.8% year to date (sending down the dividend yield) plus falling profit forecasts, also takes some of the shine off the appeal of UK equities for income, but a glut of share buybacks is set to boost returns for investors.

Analysts now expect £80.4 billion in dividends from the FTSE 100 in 2025, down from the £83 billion expected three months ago, and barely a 2% increase on 2024, according to AJ Bell’s latest dividend monitor for the second quarter of 2025.

This puts the FTSE 100 on a forward dividend yield of 3.5% based on aggregated analysts’ forecasts for 2025, after the index’s solid gains in the year to date. The UK’s premier index has provided a 9.6% total return so far in 2025, compared to just 2.1% from the S&P 500, as the US has started to lag on the global stage.

Share buybacks supplement FTSE 100 dividends

The FTSE 100’s 3.5% dividend yield is being supplemented very nicely by share buybacks.

Buybacks can be good news for investors, as they usually offer shareholders the opportunity to sell their stock at a premium price. They can also help push the share price up for those who decide to hold on to their investment.

While the final tally for buybacks in 2024 was £58.3 billion, just enough to exceed 2022’s total and set a new record high, FTSE 100 companies are already ahead of that game this year.

They have already declared buybacks worth £39 billion, more than half last year’s total in the first quarter alone, although two – Next and Bunzl – have called a temporary halt to their schemes.

Adding together the forecast dividend total of £80.4 billion to the planned buybacks gives a total cash return of £119.4 billion, some 5.25% of the FTSE 100’s total £2.3 trillion stock market valuation.

Russ Mould, AJ Bell investment director, said: “That cash yield beats inflation, the 10-year gilt yield and the Bank of England base rate which, on balance, still seems set to go lower before it goes higher once more.”

None of the 100 firms listed on the index has yet declared a special dividend for 2025. Last year, HSBC, Fresnillo, Berkeley Group, Associated British Foods and Admiral all offered such payments, worth a total of £3.7 billion between them.

“Any similar distributions could further top up the cash pot, as could any merger and acquisition activity,” said Mould. “A predator is yet to circle a FTSE 100 member in 2025, but buyers of UK assets have tabled bids worth a total of £20 billion already this year, after £49 billion-worth of successful approaches in 2024. Takeover deals can therefore also add to the total return from the UK equity market overall.”

Which FTSE 100 companies are increasing dividends?

While the FTSE 100 remains attractive for income-seekers there remains a fair degree of concentration risk within the UK’s headline index. Just 10 companies are predicted to pay out 53% of the forecast total dividends for 2025, at £42.4 billion, and the top 20 are expected to contribute £55.7 billion, or 69% of the estimated total.

There seems little likelihood this concentration risk will abate anytime soon, as companies hold fire on paying out dividends they may have to cut later.

“In terms of dividend growth, analysts seem to think that big increases will be a relative rarity in 2025, perhaps because buybacks are playing a big role in capital allocation plays – a board and chief executive are likely to draw less flak for a pause in a buyback than they are for a dividend cut,” said Mould.

Investors also need to bear in mind the role of the pound, he added, whose strength against the euro and particularly the dollar this year reduces the sterling value of the dividends declared in those currencies by 28 current members of the FTSE 100.

Source: AJ Bell Q2 2025 Dividend Dashboard, company accounts, Marketscreener, consensus analysts’ forecasts, LSEG Datastream. Ordinary dividends only.

Top 10 dividend yields in the FTSE 100

The top 10 yielding companies in the FTSE 100 include a mix of investment and financial services companies, banks, miners and tobacco companies. This is fairly typical – investors often turn to these sectors for the attractive dividends on offer.

However, it is important that the figures in the below table are understood in context.

A high dividend yield is often a good thing, suggesting cash is being returned to investors. But it can also just be a sign of a falling share price (as dividend yield is calculated by dividing the total annual dividends by the share price).

It is also important to look at a company’s dividend cover and payout ratio to understand whether any cash returns are sustainable.

Dividend cover shows you how many times a company could afford to pay dividends to shareholders based on its income. Meanwhile, payout ratio shows you how much of the company’s earnings would be spent on meeting any dividend payments.

A payout ratio over 100% suggests a company could be paying more in dividends than it can afford based on its earnings.

Source: AJ Bell Q2 2025 Dividend Dashboard, company accounts, Marketscreener, consensus analysts’ forecasts, LSEG Datastream. Ordinary dividends only.

Dividend cover of 2 times is typically viewed as positive for ongoing payouts, allowing companies to weather any economic shocks that would otherwise see them cut dividends. Currently dividend cover is just above this level at 2.01 times.

This level is also far higher than the lows seen in 2015/16, when there were a raft of dividend cuts.

“Analysts seem confident enough in the outlook for 2025 as they expect 89 FTSE 100 members to raise their dividend in the coming year, with just five seen at risk of a cut (compared to a dozen actual reductions in 2024),” said Mould.

But the increases are far from substantial, and earnings estimates are falling.

“Investors will have to keep an eye on cash flow statements and balance sheets, as well as profit and loss accounts, even if those buybacks may provide some sort of cash buffer that could be redirected toward supporting dividends, if push ever comes to shove,” said Mould.

Burberry has been dumped out of the FTSE 100 index of Britain's biggest listed companies after 15 years in the top flight. 

The historic British brand, which is known for its check print and trench coats, appears to have fallen out of fashion after its share price slumped by almost half over the past six months. It has been replaced by insurer Hiscox, which has seen its share price rise by a fifth over the past year.

The FTSE 100 index is reshuffled four times a year, enabling top-performing companies to enter, while laggards slip out into the lower tier FTSE 250.

FTSE Russell, the global index provider, said: “In the rebalance, Burberry Group will leave the FTSE 100 and enter the FTSE 250.

“The rules-driven, impartial quarterly reviews ensure the indexes continue to portray an accurate reflection of the market they represent.”

Burberry has felt the impact of a slowdown in the wider luxury sector, with demand from shoppers dented during the cost-of-living crisis. It ousted its chief executive Jonathan Akeroyd after just over two years in July and axed dividend payouts following a sales slump. Akeroyd was replaced as CEO by industry veteran Joshua Schulman, who was previously the boss of American fashion brands Michael Kors and Coach.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Turning things around from here is a tough task for the new chief executive, Joshua Schulman.

"His experience at brands such as Michael Kors, Coach, and Jimmy Choo should help Burberry build back up its brand desirability, but this is likely going to take considerable investment and patience."

Raspberry Pi promoted to the FTSE 250 

At the same time the reshuffle has seen Raspberry Pi, the British microcomputer maker, enter the FTSE 250 only three months after listing.

The IPO was cited as a victory for the London market, which has suffered from a number of UK-listed firms being bought out or moving abroad.

Paddy Power-owner Flutter, for example, has shifted its main stock market listing to New York, while German-owned Tui signed off a plan to delist from London in February. 

Before Raspberry Pi’s IPO, London’s stock market has struggled to attract interest from high-growth technology firms, which have shown a preference to list in New York. Indeed, the London Stock Exchange lost out to the US last year when UK chip maker Arm Holdings chose Wall Street over London for its stock market return.

Eben Upton, chief executive of Raspberry Pi, said at the time: "The quality of the interactions during the marketing process has underlined our belief that London has the right calibre and sophistication of investor to support growing, ambitious technology businesses such as Raspberry Pi."

Investment portfolios benefit from adding companies with long records of profitable growth and rising dividends; if these firms possess databases of proprietary information that can benefit from the application of artificial intelligence (AI), so much the better. Enter RELX (LSE: REL), a FTSE 100 company worth £66 billion. It supplies global customers in a diverse set of professions and businesses with information-based analytics and decision-making tools. It is the largest player in an industry where scale is important and its growing use of analytics and decision-making tools has increased its organic growth rate. 

RELX has four divisions: risk (34.2% of revenue), scientific, technical and medical (ST&M, 33.4%), legal (20.2%) and exhibitions (12.2%). Relx serves customers in over 180 countries. The risk segment uses advanced technology and algorithms to analyse public and industry-specific content to predict risks, detect fraud and enhance efficiency. Risk’s customers include 84% of the Fortune 500 companies, nine of the world’s top 10 banks and 21 of the world’s top 25 insurance companies. ST&M includes 2,900 journals, ScienceDirect (the world’s largest platform of peer-reviewed scientific and medical research with over 21 million pieces of content) and SciVal – a web-based analytics tool providing insights into the research performance of over 24,000 academic, industry and government research institutes. 

Legal includes the well-known LexisNexis database with more than 138 billion legal, court and patent documents, to which over 2.2 million new documents are added daily. It also includes PatentSight, which rates the innovative strength of 152 million patents from 100 countries. Exhibitions organised 286 face-to-face exhibitions in 2023 with over six million visitors and serves 42 industry sectors in 25 countries. RELX already has 10 products on the market using generative AI to help professional customers. These include Lexis+AI for legal professionals, ClinicalKey AI for clinicians and AI Assist for HR professionals. Lexis+AI for lawyers, for example, features conversational search, intelligent legal drafting, insightful summarising and analysis of documents. All these activities are supported by state-of-the-art encryption and privacy technology to keep sensitive data secure.

Should you invest in Relx?

RELX was founded in 1903 and has undergone a complete transformation over the last 24 years. In 2000, 64% of revenue came from printed products and 22% from electronic ones. Now print comprises 5% of sales and electronic offerings 83%. In 2023 the other 12% was accounted for by face-to-face revenue (exhibitions). Relx has also moved on from its mainly European roots (the merger of Reed and Elsevier) by growing its North American revenue to 59% of the total. Europe comprises 21% and other countries 20%. The majority of overall revenue now comes from subscriptions or long-term contracts, which greatly reduces volatility. The company has a wide “moat” (an enduring competitive advantage) based on its intangible assets (such as proprietary databases) and switching costs: it would be expensive for clients to switch to a rival. The moat, coupled with the recurring revenue base, reduces cyclicality and gives a high degree of certainty and predictability to future growth. 

RELX’s revenue and profits dipped during Covid, but both have risen steadily in the last few years. Revenue is up from £7.1 billion in 2020 to £9.2 billion in 2023, with adjusted operating profit jumping from £2.08 billion to £3.03 billion. The dividend was increased from 45.7p to 58.8p over the same period. CEO Erik Engstrom has led the company since 2009 and it has grown mainly organically, with small bolt-on acquisitions. There has been an upward trend in both operating margin and return on invested capital over the last few years.

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Investing platform giant Hargreaves Lansdown is set to exit the stock market next week as the £5.4 billion takeover of the brand by a group of private equity investors nears completion.

The consortium led by CVC Capital Partners made several bids for the investment platform earlier last year year, with the Hargreaves Lansdown board finally agreeing to an offer in August 2025

The £11.40-a-share offer was recommended to shareholders, and 87% voted the deal through in October 2024.

As a result, the FTSE 100 company will leave the London stock market. The buyers are CVC, Sweden’s Nordic Capital, and a subsidiary of the Abu Dhabi Investment Authority.

A stock market update earlier this week (18 March), confirmed that Hargreaves Lansdown shares will be suspended from 24 March and the company is expected to delist on 25 March in preparation for the deal to complete.

It was also announced this week that Hargreaves Lansdown’s chief financial officer Amy Stirling will leave the business.

Hargreaves Lansdown is the UK’s largest investment platform, with 1.8 million customers. In recent years, it has launched a savings marketplace called Active Savings and cut the fees on lifetime ISAs and junior ISAs.

Earlier this year Hargreaves Lansdown gave retail investors access to primary gilt markets. It has also expanded its range of managed funds with a cheaper, index-focused alternative.

We look at what the takeover means for you, whether you’re a shareholder or a customer.

I’m a shareholder – how does it affect me? 

Hargreaves Lansdown was founded in 1981 by Peter Hargreaves and Stephen Lansdown. They own 26% of the shares between them.

The offer values the company at £11.40 per share and is more than 15% higher than the £9.85 per share offer made in April, which was dismissed by the Hargreaves Lansdown board as significantly undervaluing the company.

The takeover will result in a bumper payday for the billionaire founders, netting them hundreds of millions of pounds.

Ordinary shareholders were asked to vote on the deal, and 87% agreed to it, while 13% voted against the takeover.

It means Hargreaves Lansdown's takeover deal has cleared a major hurdle, as there needed to be at least a 75% majority for the deal to go ahead.

Shareholders will now have to decide whether to transfer their stake to the new unlisted company or accept cash in exchange for their shares.

Those wanting to sell their holding will get £11.10 per share in cash, plus a dividend of 30p per share, taking the total to £11.40. Shareholders who wish to retain their stake will be subject to an overall cap of 35% ownership.

It is expected that most shareholders will opt to take the cash, rather than have a holding in an unlisted company. The announcement in August confirmed that Hargreaves would take only 50% of his shares into the new venture, while Lansdown will sell all of his shares.

Should I sell or keep my shares?

Hargreaves Lansdown shares are easily traded at the moment because they are listed on the UK stock market. Once the company goes into private hands, you will no longer be able to sell and buy them in the same way.

Holding unlisted shares can be tricky to manage and hard to sell. If you want to offload shares you will have to find a buyer or wait until the new owners decide to sell or list the company on a stock exchange again.

Unlisted companies operate without the same reporting requirements as those on a stock market, which can make it difficult to get an accurate picture of their operations and performance. It can be difficult to value unlisted firms, and so you may not know how much your holding is worth.

We have lots more information on this topic in our article on what happens when a company delists from a stock exchange?

I’m a customer – how will it affect me? 

There is unlikely to be any changes to the investment platform either now or in the early stages following the takeover.

Hargreaves Lansdown says: “It’s important to understand that the offer doesn’t have any impact on how your assets are held or managed and there is no change to the security of your assets.

“Nor are we planning any changes to any of our products, services, or to your investments and cash on our platform.”

You should be able to continue to access your account (whether it's in an ISA, savings account, pension or fund and share account), and trade investments, regardless of who owns the business.

The consortium says it has no intention of changing the location of the investment firm’s Bristol headquarters, which is where most of its 2,400 staff work.

The private equity buyers praised Hargreaves Lansdown for its strong, trusted brand and its important purpose of helping people manage their financial wealth and enabling clients to get the right outcomes.

However, it also said the company requires substantial investment in an "extensive technology-led transformation", in order to drive the next phase of growth and development. So, in time, the investment platform could look different in terms of its technology infrastructure and digital channels.

Hargreaves Lansdown saw a 16% drop in new business in the three months to September 2024, according to its latest results.

The firm said it brought in £500 million in net new business, compared with £600 million in the previous quarter.

Is my money at risk?

Hargreaves Lansdown will continue to be regulated by the Financial Conduct Authority (FCA).

The investment platform states: “The entity which holds client assets (HL Nominee) is segregated from the business and the liabilities of the business.

“All client money is held by us on trust and is segregated from our own funds in accordance with the FCA’s client money rules and guidance.”

The FCA regulation means customers will still be able to take any complaints to the Financial Ombudsman Service. You will also continue to have protection under the Financial Services Compensation Scheme (FSCS), which covers up to £85,000 held in any firm that fails.

Over the past 15 years, the notion that a company exists to make money for its shareholders has often been cast aside. Many technology companies saw their share prices rocket even as they drowned in red ink. This was partly due to a genuine belief that the losses were necessary for them to grow enough to reach critical scale. However, near-zero interest rates also explain the trend; they meant that investors had little alternative but to be patient. However, with interest rates now back to normal levels, such companies are being battered.

Chief among them is Ocado (LSE: OCDO). This company pioneered the idea of ordering your groceries online and having them delivered to your home. It is so closely associated with online food shopping that it has almost achieved verb status, in the same way that Google is inextricably linked with search engines. Surveys show that 75% of Britons are aware of the brand. But while Google has been able to make billions in profits, Ocado has not succeeded in converting its ubiquity into hard cash.

Ocado's downfall comes as online shopping declines

There are two reasons for this. While online shopping got a big boost during the pandemic, people quickly returned to the shops once restrictions were lifted, which is not surprising given that the vast majority of people in the UK live close to a supermarket. Even today, online shopping only makes up around 13% of food sales in the UK (and a similar figure in the US). Crucially, the supermarkets themselves adapted by launching their own online services, taking advantage of their huge networks. The upshot? Ocado now accounts for barely more than one in 10 online grocery sales.

Worse, Ocado’s online shop is now embroiled in a legal dispute with Marks & Spencer (which owns 50% of Ocado.com) over payments related to Ocado missing contractual targets. While Ocado is attempting to reinvent itself as a technology company that can help other supermarkets develop their own online operations, this strategy is also running into problems.

Canadian supermarket chain Sobeys recently announced it would delay the opening of its Vancouver customer fulfilment centre, which Ocado was supposed to run. The group also still trades at 0.85 times sales, much more than 0.45 times for Marks & Spencer, 0.31 for Tesco and 0.18 for J Sainsbury – yet all of these companies are making a profit. The shares remain overvalued.

At the same time, all technical indicators suggest that the market is souring on Ocado. The stock has lagged the market by 60% over the last six months, and trades below its 50-day and 200-day moving averages. What’s more, the company was demoted from the FTSE 100 index a few weeks ago. I suggest shorting the shares at their current price of 320p at £6 per 1p. Cover your position at 480p, which would give you a total downside of £960.

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The FTSE 100 market may be heading for success - here are the stocks to watch, according to experts.

“Britain’s stock market might finally be shaking off years of underperformance,” says Lucy Raitano on Reuters. The FTSE 100 has been left out of the “AI mania” gripping global markets, but enthusiasm over technology is starting to wane. 

The UK’s blue-chip index made new record highs in May and is up by 7% so far this year, the same as the more domestically focused FTSE 250. London’s bias towards “old economy” sectors such as raw materials and banking have held it back in recent years, but that weakness is turning into a strength, says Bastien Bouchaud in Les Echos. 

Commodities are real assets and thus look attractive in a time of persistent inflation, while higher-for-longer interest rates will boost bank profits. Thanks to Shell and BP, energy accounts for roughly a fifth of all FTSE 100 profits. “A 10% rise in oil prices translates into a two percentage point rise in FTSE 100 profit growth,” says Lilia Peytavin of Goldman Sachs. 

London has plenty of room to catch up: the FTSE 100 has gained 12.5% over the past five years, losing its position as Europe’s dominant market to France’s CAC 40, which is up 49% over the same period. The prolonged uncertainty following the 2016 Brexit referendum prompted investors to attach “a higher risk premium to UK equities”, Steve Magill of UBS Asset Management tells David Thorpe in FT Adviser. 

Global investors thought that UK assets were risky, so they were only willing to buy them at a discount. Yet calmer political waters in Britain (and more turbulent ones overseas) mean that the Brexit risk premium now looks to have disappeared. 

With an election date on the calendar, global fund managers are feeling increasingly positive about the UK, say Farah Elbahrawy and Naomi Tajitsu on Bloomberg. Investors appreciate certainty and there is little doubt about who will win the election; there is little difference between the two parties on macroeconomics in any case. UK stocks are paying twice the dividend available in many comparable markets, but “continue to trade near a record-low discount” to other developed markets.

How long will the FTSE 100 success last?

The FTSE 100 has done well recently, but the baton could yet pass to the mid and small caps of the FTSE 250. The pound has risen against most other large currencies this year. That’s a headwind for the profits of FTSE 100 multinationals (which make much of their money in foreign currency), but good news for smaller, domestic companies, which find that their money goes further. 

Small and mid-caps are on big discounts to large caps, Rachel Winter of Killik & Co tells Christopher Johnson in Morningstar. In addition to a strong pound, they will also enjoy a boost from eventual interest-rate cuts and a (modestly) better outlook for the domestic economy. There looks to be “particular value” in UK “small and mid-cap opportunities”.

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The FTSE 100 hit a record high this week in a boost for investors backing UK equities 

The UK’s blue-chip stock index rose to 8,474.41 on Wednesday and has grown around 10% so far in 2024.

It comes as many analysts have described the UK stock market as undervalued, especially as it doesn’t benefit from the current technology trends seen by the popularity of the Magnificent 7 in the US.

It does, however, have plenty of top shares and established brands such as oil companies, banks and miners that pay a solid dividend.

“People have been saying it’s good value for some time, but previously what it lacked was a catalyst to change the prevailing negative sentiment and reverse the flows out of UK assets that had been depressing share prices,” says Rob Morgan, chief investment analyst at Charles Stanley 

“Gradually things have turned. Helpfully, the performance of the UK economy has perked up – to the surprise of many commentators. It’s still not great, perhaps, but it’s definitely significantly better than feared, and that’s helped boost investor sentiment towards the UK as a whole.”

So is now the time to buy British stocks or have investors missed the boat?

Why is the FTSE 100 rising?

Morgan highlights that he big international earners in the FTSE 100 have benefited from strength in the US dollar, which increases their earnings when measured in pounds, and overall company results have been pleasing. 

This has driven dividend payouts to shareholders and fuelled share buybacks, which boosts valuations.

Ben Seager-Scott, chief investment officer at Mazars, says the UK had been left behind on the global equity rebound and more US-focused technology boom but investors now seem to be catching up on the discounts its equities offer.

“It seems investors are once again thinking about valuations and the positive prospects for UK companies, either because they are global companies that are trading attractively or because they have exposure to the UK economy which seems to have emerged from recession,” he says.

There are also signs of more merger and acquisition activity which is boosting the index, such as miner BHP planning a £31 billion takeover of rival Anglo American.

Is now a good time to back the UK stock market?

Record highs tend to produce more record highs, says Chris Beauchamp, chief market analyst at IG Group.

But he warns that the short-term the valuation gap has closed to an extent, and more good news is now priced in.

“Charging in now when the index has rallied 12% from the lows of February might not be the best plan from a short-term performance perspective, he adds.

 “What is remarkable is that even now some quality firms trade on undemanding price-to-earning ratios, some even in single digits. Banks, miners and oil firms populate the list, almost all of whom pay out solid dividends, making them still worth considering.”

Seager-Scott adds that while most people instinctively believe in a form of mean reversion – that what goes up must come down – it’s worth remembering that markets tend to grow over time.

“If anything it is valuations and fundamentals such as earnings growth that tend to mean revert, whilst prices generally trend upwards. 

“With that in mind, despite the recent positive moves, the UK equity market continues to look attractively valued and there’s every reason to think the market can keep on performing.”

But context is important and Lisa Johnstone, chartered financial planner for VWM Wealth, says the FTSE 100 has barely moved over the past 20 years.

“Many of the traditional companies within the FTSE are those that pay a generous dividend, but the old fashioned label is hurting the index,” she says.

“Many firms are publicly looking at delisting and going to the US instead. In an increasingly globalised world the FTSE 100 a small index of 100 companies just doesn’t have the presence it once did.

“From an investor perspective the last five years of the FTSE 100 and last few months are a textbook example of the importance of a globally diversified portfolio which over the last few years would have served any investor better than speculating in this one small index. 

"It is a very different index to the US markets and therefore important to include as a diversifier; diversification across all global markets is likely to be the best strategy for growth overall."

Laith Khalaf, head of investment analysis at AJ Bell, agrees that UK investors shouldn’t get carried away by one month of strong performance 

He highlights that the FTSE is still lagging the S&P 500 and other European indices as well as Tokyo's main index, while other UK markets such as the FTSE 250 are still 14% below their peak.

“The rise in the Footsie has been part of a global risk rally over the last month, and while it’s pleasing to see the UK near the top of the leaderboard for a change, a rising tide has been lifting all boats,” adds Khalaf.

“One swallow doesn’t make a summer, and the UK still has significant ground to make up on international peers to regain some ballast in the global stock market.”

One of the most often-repeated investing mantras says ‘sell in May and go away, don’t come back until St Leger Day’, referring to a well-known British horse racing day which takes place in September.

The saying is thought to date back to a 1950s edition of Stock Trader's Almanac. In those days, financial professionals would typically spend most of the summer on holiday. The issue wasn’t so much that stocks would fall over the summer, but that they wouldn’t do a whole lot at all.

“The rationale is simply that, back in the mists of time, the main market participants (think bowler hats and coffee shops in London) were all away on their summer holidays and socials,” said Ben Seager-Scott, CIO at advisory firm Forvis Mazars. “There simply wasn’t much of a market and everything, at best, drifted until everyone came back after the summer.”

But does this stock market saying hold any value for your investments today?

The short answer appears to be no.

“There is scant evidence that it was true historically and I think there’s even less of a case now, with constant 24-hour news cycles, much wider market participation and ubiquitous mobile communication technology,” said Seager-Scott.

Did ‘sell in May’ work in 2025?

While the adage often fails to deliver, it rarely performs as badly as it did last year.

Major indices enjoyed encouraging returns between May and September, largely reflecting an uptick in investor sentiment following the chaotic fallout from Trump’s Liberation Day tariffs, announced on 2 April.

“Last year was a great example of when [selling in May] would not have worked out in your favour,” said Adrian Murphy, CEO of wealth manager Murphy Wealth. “Had you done so, you would have missed out on a good deal of the recovery from the tariff shocks in April – the S&P 500 rose more than 18% and the FTSE 100 gained more than 9% from May to mid-September

And the geopolitical tensions plaguing the market this year could be just as much of a reason to avoid selling in May in 2026 as they were last year.

“With the conflict in the Middle East, markets are volatile,” said Murphy. “No one knows how the situation will pan out in the short term, let alone the next few months and beyond.

“You are as likely to crystallise any losses and be forced to reinvest at a higher price at the end of the summer, as you are to make gains by buying back in again when the market looks cheaper,” Murphy added.

However, there is some evidence that trading volumes are lower over the summer and during the Christmas period. That can increase market volatility, because fewer buyers and sellers can necessitate larger jumps between prices in order to buy or sell a stock.

“But this is very much two-way,” said Seager-Scott. That extra volatility can push prices up or down, depending on sentiment.

“That may partly explain the Santa rally effect,” Seager-Scott said, adding that there is little evidence that this is a seasonal pattern and rather a label that is applied in hindsight whenever markets happen to rise in December.

Do stock markets tend to underperform over the summer?

It’s questionable whether or not there’s any empirical evidence to support selling your shares in May. Various studies have looked into the results, and between them they paint a fairly blurred picture.

Fidelity International, for example, found that selling stocks in May generated positive returns in just 14 of the last 38 years. Investopedia investigated the trend going back to the 1930s and while it found that summers have generally yielded higher returns than winter since the 1950s, the opposite was true for the two decades before then.

Analysis from investing platform IG has found that years when Trump is in office have completely subverted the traditional ‘sell in May’ mantra.

The analysis found that the S&P 500 has returned 9.5% between May and October during Trump years, vs 1.3% during non-Trump years over the past two decades. That said, Trump years have also seen better-than-average performance for the index across the full year, with average annual gains of 14.6% in Trump years compared to 6.8% in non-Trump years.

“While Trump-specific trading patterns have already emerged, most notably the TACO [‘Trump Always Chickens Out’] trade of buying the dip before Trump’s key trade and foreign policy deadlines, investors in US equities should also be reconsidering their summer trading habits,” said Chris Beauchamp, chief market analyst UK at IG. “We may yet see a ‘Summer of Trump’ trend emerge as investors cotton on.”

The FTSE 100, though, tends to fare worse between May and October when Trump is in power compared to years when he isn’t. The index fell 2% on average over the summer months in years when Trump was in power, compared to gaining 0.6% in non-Trump years over the last 20.

On the face of it, that might seem to suggest that if you are invested in UK stocks it could make sense to sell in May, at least when Trump is in power, but on the whole most investment experts don’t think this is a good idea.

“In terms of good investment practice, given that markets tend to rise over time and, importantly, dividend income also accrues through the year, I’m not convinced opting to be sat in cash half the time makes much sense to me,” said Seager-Scott.

On that basis, time in the market, rather than timing the market, seems to be the more reliable (and easier) strategy.

Shoppers may be on the hunt for bargains during Black Friday and Cyber Monday but savvy investors can also pick up a good deal in the stock market.

UK shares are trading at a significant valuation discount to global equities, according to analysis by investment platform Bestinvest.

The FTSE 100 is down around 1.4% so far this year while the more domestic-focused FTSE 250 is down 3% and the FTSE 350 has fallen 1.62%.

Meanwhile, the FTSE All Share Index is down around 1.6%.

It comes amid continuing uncertainty over if the UK is in or entering a recession and the future direction of inflation and interest rates, but this could be an opportunity for investors.

"Weak share prices and low valuations often cause people to place investment decisions on pause or even send them running for the exit, with many only turning back to investing when the economic news is more cheerful, markets are soaring and share prices are high," says Jason Hollands, managing director at Bestinvest.

"For savvy investors, times of market uncertainty present an opportunity to scoop up shares at bargain valuations. 

"But there are also pitfalls to avoid as a very depressed valuation can also be a sign that the outlook for a business is grim or the dividend payouts are unsustainable, so never buy a share on a too-good-to-be-true valuation alone."

UK investment opportunities

Investment firm Bestinvest has looked at FTSE 350 companies and calculated the current price per share by the consensus forecast for next year’s earnings per share to give a 12-month forward price-to-earnings (p/e) ratio.

The investment platform argues that this is more useful than looking backwards at previous earnings.

The research found that that the UK stock market is trading on a valuation discount to global equities, with FTSE 100 shares trading on prices of around 10 times their 12-month forecast earnings.

That is a third lower than their longer-term median level and also at a deep discount to global equities which are currently trading on 15.7 times forecast earnings.   

 "UK equities have been unloved by investors for some time, with significant outflows from UK equity funds on the back of gloomy economic predictions," says Hollands.

He says it is a mistake to confuse the UK stock market and economy as one and the same thing as the vast majority of earnings made by larger UK-listed companies are generated internationally.

Bargain UK stocks

Bestinvest's research found that 102 companies in the FTSE 350 index, excluding investment trusts, are currently trading on single digit 12-month forward multiples of less than 10 times their expected earnings over the next year.    

Banks and energy companies are especially cheap, Hollands says.

Barclays is trading at a forward 12-month price to earnings ratio of 4.13, while NatWest and Virgin Money are at 5.

Oil giant BP has a forward looking p/e ratio of 6.24 and its rival Shell is at 7.7.

Consumer goods-focused companies such as Imperial Brands and Currys can also be picked up at p/e ratios of 5.8 and 5.9 respectively.

Value funds

Researching shares can be time consuming and pricey depending on the trading fees and investment platform you use.

Another option is to back fund managers and investment trusts who put a strong emphasis on targeting companies they believe are currently undervalued and have recovery potential.  

It comes as discounts on investment trusts are also at record levels.

This includes investment trusts that target ‘value’ situations and unloved British firms.

For example,  the Temple Bar Investment Trust, which includes brands such as Shell and Marks and Spencer in its portfolio, is currently trading at a discount to NAV of 5.68%.

The Murray Income Trust, which has major UK brands such as AstraZeneca, Unilever and Diageo in its portfolio, currently has a discount to NAV of 8.02%.

Investors can also get a discount to NAV of 8.64% from Fidelity Special Values, where you will find well-known holdings such as Imperial Brands and Aviva.

"When choosing a fund manager that targets ‘value’ situations, we typically favour those who have spotted a catalyst for change at an unloved company, such as major restructuring initiative or a fresh management team at the top, that will eventually trigger a reappraisal," adds Hollands.

"Alternatively, another approach is to back fund managers who focus on assessing companies that are undervalued compared to their ‘intrinsic value’ rather than simply focusing on low price/earnings multiples. 

“This involves finding companies that are undervalued against their long-term potential, where the fund manager considers the total worth of a business, such as its assets (including the brand itself) and value of future income streams, rather than only honing-in on recent or forecast profits.”

 While undervalued shares can provide great opportunities, caution is still important.

"It is always unwise to base a buying decision solely on a share’s low price/earnings valuation without considering the quality and outlook for the business,” adds Hollands.

"In the words of legendary investor Warren Buffet: ‘it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price’.”"

The FTSE 100 has hit its 40th birthday milestone and has delivered many happy returns for investors during its lifetime.

The UK’s premier stock market index celebrates turning 40 today ( 3 January 3), with a quarter of its original constituents still making up the blue-chip index.

Like many 40-year-olds, it has seen plenty of ups and downs during its lifetime, such as the dotcom boom and bubble, the financial crisis and more recently the pandemic and cost of living crisis which have all weighed on performance.

It still contains 26 of its founder members that were included when the index first started, of which 14 still have the same name.

“The FTSE 100 launched on 3 January 1984, to replace the FT-30, and the stock market benchmark’s make up has changed a lot since then,” says Russ Mould, investment director for fund and stockbroking platform AJ Bell.

“Just fourteen founder members are still in the index and still using the very same name, while 12 more are still part of UK plc’s corporate elite, but under a different guise.

“The other 74 have either fallen down through the ranks into the realms of mid- and small- caps, been acquired, been broken up or in three instances gone out of business, as the index has taken on a less domestic and more international flavour.”

The five largest companies in the FTSE 100 - Shell, AstraZeneca, HSBC, Unilever and BP - now represent nearly a third of the entire index. 

How has the FTSE 100 changed?

The index has taken on a less domestic and more international flavour over the past four decades, according to AJ Bell.

Of the 100 firms, just 26 of its founder members are still in the index.

This is split between 14 that even have the same name, although Whitbread, for example, is a different company now after shifting from breweries to becoming a hotel and restaurant group. 

• Associated British Foods
• Barclays
• Barratt Development
• Land Securities
• Legal & General
• Lloyds Bank
• Marks & Spencer
• Pearson
• Sainsbury
• Smith & Nephew
• Standard Chartered
• Tesco
• Unilever
• Whitbread

Source: AJ Bell

The other 12 have remained but have since changed name and sometimes corporate structure due to mergers and acquisitions or changes in strategy. 

Source: AJ Bell 

Another 13 including Beecham and Ladbrokes have been acquired and became part of a current FTSE 100 member. 

Source: AJ Bell

Two more spawned what are now FTSE 100 firms thanks to spin-offs, demergers and break-ups 

Diageo can trace itself back to both Grand Metropolitan and Allied Domecq, while Racal demerged what is now Vodafone.

Another 40 brands such as Boots, Burton, Cable & Wireless and House of Fraser have been acquired and since gone private, while 11 including Cadbury Schweppe and General Electric have broken up and subsequently de-listed.

Five are still quoted but are members of a different UK index - Hammerson, Johnson Matthey, Rank, Edinburgh Investment Trust and Elementis.

Just three have gone bankrupt, British and Commonwealth Shipping, Ferranti and MFI Furniture. 

“Given the rate of change in technology, consumer tastes and regulation to name but three things that may have posed difficulties for companies over the past 40 years, a 3% failure rate does not look too bad,” adds Mould.

“This may help to explain the attraction the FTSE 100 has for many investors, as its member firms’ very scale means they tend to be very dependable and can be excellent sources of cashflow and thus dividends given their maturity. FTSE 100 firms are also subject to the very highest levels of scrutiny, and corporate governance has to be top notch to withstand the market’s examinations.”

How much have investors earned from the FTSE 100?

“Measured in point terms, the FTSE 100 has risen 447% since its inception and over the last five years it has seen a mere increase of just 15% which is particularly pedestrian compared to the US S&P 500 Index which has risen 90% over the same period," Jason Hollands of BestInvest says,

"While there is no denying that the FTSE 100 has been massively outgunned by US equity performance, the movement in FTSE 100 points is a very partial picture of returns made as the overwhelmingly majority of total returns made from the UK stock market – in fact virtually all the real returns once inflation is factored in - have come from the dividend payments. When these are included and reinvested, the total return from the FTSE 100 over the last forty years is 2,219%  and over five years it is 39%".

Below are the FTSE 100 returns in capital and total returns (dividends reinvested).

Has the FTSE 100 moved with the times?

Many people hit age 40 and worry that they are over the hill. They may no longer recognise footballers, pop music or the latest fashion trends.

A similar accusation could be thrown at the FTSE 100.

“Critics will argue the FTSE 100 has, however, ossified since the turn of the century,” adds Mould.

“The index peaked at 6,930 on December 31 1999, just as the technology, media and telecoms bubble began to leak air, and since then it has grubbed out a capital return of just 9.7%. 

“That equates to a turgid compound annual return of 0.4% and comes nowhere close to covering the compound annual rate of inflation of 3.4%, based on the RPI over the past twenty-four years.”

Some may say the FTSE 100 hasn’t done enough to move with the times and has become too dependent upon a small number of behemoths that have been in the index for a long time.

Just a dozen FTSE 100 firms make up half of its current market cap, says Mould.

“ Eight of them – Shell, Unilever, BP, Rio Tinto, BAT, GSK, RELX and Reckitt Benckiser – were there in 1984, in one way shape or form and two more (HSBC and Diageo) have their origins in founder members of the index, in the shape of Midland Bank (HSBC) and Allied Lyons, Distillers and Grand Metropolitan (Diageo),” adds Mould.

 “Eight of the forecast twelve biggest contributors to the FTSE 100’s 2023 aggregate-pre-tax profit were also there at the start in 1984 – Shell, BP, Rio Tinto, BAT, Unilever, Barclays, GSK and Lloyds – while NatWest and HSBC can be traced back to two more founder members, National Westminster Bank and Midland Bank.

 “And six of the forecast twelve biggest payers of dividends in 2023 also hail from the first crop of FTSE 100 firms. They are Shell, BAT, Rio Tinto, BP, Unilever and GSK, while HSBC and Diageo can trace their origins back to the first crop of constituents.

But when you actually look at the makeup, Mould suggests that the FTSE 100 is still managing to evolve over time – albeit slowly  - as can be seen from a simple comparison of the index on 3 January 1984 and 30 September 2023.  

“Further changes are likely, thanks to the final index reshuffle of 2023,” he adds.

It’s now clear the UK economy is doing relatively well compared to Europe rather than falling behind, as was previously thought. However, in stock market terms, Europe remains the leader. 

Over the past five years, the UK’s FTSE All Share index has returned 20% while the FTSE Europe ex-UK index has returned 40%. As a result, Europe ex UK still accounts for around 12% of the MSCI All Countries World index while the UK has sunk to just 3.5%.

Europe’s winners 

Europe has outperformed as its leading companies have prospered on the world stage. Novo Nordisk recently overtook LVMH as Europe’s largest company, thanks to a recent study showing that its slimming drug, Wegovy, had a significant cardiovascular benefit. Novo Nordisk’s share price has tripled in the last three years while LVMH’s has merely doubled.

Meanwhile, the market value of ASML, which supplies high-tech equipment to the world’s semiconductor producers, has multiplied more than seven-fold in the last ten years while Europe’s long-established giants, Nestle, Roche and, to a lesser extent, Novartis have been solid performers.

These winners show it’s hard to ignore Europe if you’re looking for the best companies. Brian Chingano of Verdad Research notes that “after decades of outperformance by the US relative to international markets, capital has flooded into the US market while largely shunning international markets.” 

Company profitability, both in terms of gross profit and of cash flow relative to assets, is significantly higher in Europe than in North America, yet “the European market trades at a price/book ratio of 1.9 compared with 3.9 in North America.” “We believe that the combination of historically wide valuation spreads in Europe and higher levels of profitability bolsters the case for significant outperformance of European value stocks,” he concludes.  

Therefore, there’s a good case for buying Europe-focused investment trusts and there’s a good selection of well-managed trusts trading at discounts to net asset value (NAV) to choose from. 

Top trusts  

The largest is Fidelity European (FEV) with £1.7bn of assets. It trades on a 5% discount and yields 2.3%. The top three holdings, Nestle, Novo Nordisk and ASML account for 17% of the portfolio and unlike other funds, it’s a little less growth-orientated with financials accounting for 22% and French energy major Total the fifth largest holding at 4.6%. The five-year total return is 70%. 

BlackRock Greater Europe Trust (BRGE) has assets of £590m and trades at a discount of 4%. Novo Nordisk, LVMH and ASML are its largest holdings, accounting for 23% of the portfolio and it’s clearly focused on growth with no energy exposure. It does have some exposure to the UK - RELX is its fourth-largest holding. Over the past five years, the trust has returned 53% including income, and it currently offers a yield of 1.2%. 

Two Henderson Trusts, European Focus (HEFT) with £340m of assets and Eurotrust (HNE) with £290m, trade on 11% and 12% discounts respectively and both yield nearly 2.8%. They are both growth-focused but have different portfolios; HEFT has 27% in industrials while HNE has 19% in healthcare. They’ve returned 46% and 42% respectively over the past five years. 

JP Morgan European Growth & Income (JEGI), with £400m of assets and trading on a 10% discount, has the highest yield at 4.4% without the obvious corollary of a bias to value. Its shares trade on an 11% discount but have returned 41% over five years. 

The tail-enders, European Trust and Baillie Gifford European (both once sector darlings) have been dismal performers over the last five years but have the strongest bias to growth. Their fortunes may improve but it is probably best not to bet on them yet.

The Dow Jones Industrial Average is one of the world's most watched and most cited stock indices, containing America's 30 biggest companies. For many people, it is the stock market.

And it began life on this day in 1896 when Charles Dow, who had published his Transportation Average some 12 years earlier, published his index of 12 industrial stocks, which included the National Lead Company, the Tennessee Coal, Iron and Railroad Company, and the United States Rubber Company. The index expanded to contain 20 stocks in 1916, and 30 in 1928.

The index was originally calculated as a simple arithmetic average, the sum of the stock prices of the 12 companies divided by the number of companies in the index. Now, the prices of all the stocks are added, and the sum is divided by the “Dow Divisor”.

It's by no means a perfect index. Among the main complaints are that, with just 30 companies, it is not representative of either the US stock market or the US economy. Plus, it is a price-weighted index, so more expensive stocks have a greater influence, but it takes no account of market capitalisation. It is also a simple price return average, and does not take into account dividends.

But no matter what its flaws, there's no denying that it's done rather well since it was invented. If you'd invested $100 on the first day of publication, you'd now be sitting on something like $4.5 million. And if you'd reinvested your dividends, you'd have the mind-boggling sum of $859,580,000. There's a valuable lesson there somewhere.