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​​​Where to next for the FTSE 100 as it celebrates its 40th anniversary?

A look back on the FTSE 100’s past 40 years and comparison to its peers.

FTSE 100 Source: Bloomberg

​​​The FTSE 100 is 40 years old

​​The FTSE 100, the premier stock market index in the United Kingdom, has reached a milestone - its 40th anniversary.

​Originally launched on 3 January 1984, the FTSE 100 was designed to serve as a barometer for the UK's equity market and broader economy. The index consists of the 100 largest companies by market capitalization listed on the London Stock Exchange, currently totalling around £1.9 trillion in combined value. This represents massive growth from its initial market cap of £165.6 billion, the data first made available in 1986 thanks to FTSE Russell.

​A few veteran constituents have remained in the FTSE 100 since its beginnings, including banking giants Barclays and Lloyds, retail leaders Sainsbury's and Tesco, and tobacco conglomerates British American Tobacco and Imperial Brands according to RTE, Ireland’s National Public Service Media.

​However, the FTSE 100 has faced criticism over its sluggish performance compared to other major global indexes like the S&P 500 in the United States and the Euro Stoxx 50 in Europe. In 2023 the FTSE 100 underperformed the Dow Jones Industrial Index and Euro Stoxx 50 by over 10%, the S&P 500 by over 20% and the Nasdaq 100 by roughly 50%.

FTSE 100 comparison chart Source: Google Finance
FTSE 100 comparison chart Source: Google Finance

​While the UK benchmark has climbed 654% from its 1984 starting point, it has seen minimal gains since 2000. Meanwhile, other European and US global stock indices surged over the last two decades.

​Still, the FTSE 100 has managed to outpace both gold and UK government bonds across its 40-year track record. It also managed to end 2022, a dismal year for stocks globally, marginally in positive territory when other stock indices all ended up in the red.

​As the index now looks ahead, experts suggest it could find momentum from declining inflation and the upcoming UK general election.

​For a more in-depth analysis of the FTSE 100 and IG’s 2024 outlook please refer to my colleague Chris Beauchamp’s article here.

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