The FTSE 100 had its best year since 2021 in 2024, generating a total return of 9.7% through the year. It has followed this up to a strong start to 2025, returning 8.3% in the year to 28 February.
Few might have predicted FTSE 100 stock market index trackers to be among the top performing funds for 2024 at the start of the year, but the index surprised many with its returns.
The UK stock market is perceived to be struggling, with delistings and a dry IPO pipeline to contend with.
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Despite this, “UK investors are prioritising their home market this year,” says James McManus, chief investment officer at JP Morgan-owned digital wealth manager Nutmeg.
“While the FTSE 100 has had a good start to 2025, long-term investors in the UK might feel short-changed compared to other markets,” McManus adds.
In particular, the US and its flagship index, the S&P 500, has delivered outsized returns in recent years. However, while the FTSE 100 has gained ground, the S&P 500 “is having a challenging start to 2025”.
By contrast, “there is a budding sense of optimism about the UK”, according to Sanjay Raja, senior economist at Deutsche Bank. Raja gives several reasons for this: the UK’s pivot towards deregulation, the potential for a deeper trade deal with the EU, and increased defence spending across the continent, which Raja believes could benefit FTSE 100 stocks as they dominate the sector.
Perhaps most significantly, though, Raja expects the UK “to stay in the US’ ‘good books’ as trade war kicks off”.
The FTSE 100 certainly seems to have a degree of cover from the tariff regime as it currently exists. Steel and aluminium – on which Trump has levied universal 25% import tariffs – account for less than 3.3% of the UK’s exports to the US, and 0.1% of UK GDP, according to Ashley Webb, UK economist at Capital Economics.
Should a UK-US trade deal emerge, this could act as a further tailwind for FTSE 100 stocks.
Which are the biggest FTSE 100 stocks?
The top five stocks in the FTSE 100 according to market capitalisation (market cap) are:
These five stocks highlight the range of sectors represented in the FTSE 100; biotech, finance, energy and commodities, consumer goods and technology all have representation.
Which are the top-performing FTSE 100 stocks in 2025?
Over the last three months, the top-performing stocks in the FTSE 100 are:
Airtel Africa (LON:AAF) was boosted by a positive earnings update in January, while Rolls-Royce (LON:RR.) and BAE Systems (LON:BA.) are both beneficiaries of the trend towards increased European defence spending.
Conversely, WPP (LON:WPP), JD Sports (LON:JD) and Entain (LON:ENT) have been the biggest underperformers in the FTSE 100 over the last month, falling 31.0%, 27.4% and 20.6% respectively.
Which FTSE 100 stocks performed best in 2024?
The five top performing stocks in the FTSE 100 last year are as follows:
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Company
Total return (%)
NatWest
99.3
Rolls-Royce
95.7
DS Smith
87.8
International Consolidated Airlines
85.2
Barclays
79.3
Source: AJ Bell, ShareScope. Data to market close on 6 December 2024. Total return with dividends reinvested.
The top-performing stock in the FTSE 100 during 2024, Natwest (LON:NWG), benefitted from the UK government reducing its holding stake and indicating that it is looking to exit completely.
“A major share overhang was lifted as the government accelerated the sale of what was a large stake in the business following a bailout in the global financial crisis,” says Dan Coatsworth, investment analyst at AJ Bell. “The stake is now less than 11% versus 38% a year earlier and the government has indicated it will be out completely next year.”
The second top performing FTSE 100 stock, Rolls-Royce, enjoyed multiple tailwinds, from increased military spending to the return to the old normal in the wake of the Covid pandemic.
“A recovery in the aviation industry has helped Rolls-Royce,” says Coatsworth. “The amount of time planes fly in the sky has a direct impact on the amount Rolls-Royce makes on spares and repairs contracts for a large installed base of aircraft engines.”
Should you invest in the FTSE 100?
While 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 Coatsworth.
Additionally, the pull back in the S&P 500 so far this year underscores the value in diversifying a portfolio away from an over-reliance on one particular market.
“The tale of these two economies [US and UK] demonstrates the importance of diversifying your investments across the globe,” says McManus.
“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.”
One easy way to invest in the FTSE 100 is buying a tracker fund such as the Vanguard FTSE 100 UCITS ETF (LON:VUKE).
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Dan is a financial journalist who, prior to joining MoneyWeek, spent five years writing for OPTO, an investment magazine focused on growth and technology stocks, ETFs and thematic investing.
Before becoming a writer, Dan spent six years working in talent acquisition in the tech sector, including for credit scoring start-up ClearScore where he first developed an interest in personal finance.
Dan studied Social Anthropology and Management at Sidney Sussex College and the Judge Business School, Cambridge University. Outside finance, he also enjoys travel writing, and has edited two published travel books.
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