The UK stock market continues to perform well despite underwhelming UK economic data and policy uncertainty.
September's inflation came in at 3.8%, matching August and July, and well above the 2% target. Despite another interest rate cut taking the base rate down to 4% in August, the Bank of England’s taken a more hawkish tone, tempering investor expectations on the pace of further rate cuts. This was reflected in September, where the Bank held rates steady, and we now expect rates to stay at 4% for the remainder of the calendar year.
Chancellor Rachel Reeves will deliver the Autumn Budget in November, with investors watching closely. Most will hope for stability and certainty, conditions which enable proper planning and long-term decision making.
This article isn’t personal advice. Investments rise and fall in value, meaning you could get back less than you invest. If you’re not sure if an investment is right for you, ask for financial advice.
Remember, past performance isn’t a guide to the future. Yields are variable, and income isn’t guaranteed.
How has the UK stock market performed?
The performance of the UK stock market serves as a good reminder that investing in UK listed companies is not the same as investing in the UK economy.
Lots of companies listed on the London Stock Exchange trade in countries across the world and so aren’t reliant on a thriving UK economy to flourish.
Over the last year, the FTSE 100 index, which represents the 100 largest companies listed in the UK was the best performing part of the market.
It rose by 17.53%*, outpacing the 6.69% return from the FTSE 250 ex Investment Trusts (IT) index, and the 6.36% return from the FTSE Small Cap ex IT index.
As a style, value trounced growth, with the FTSE UK Value index delivering gains of 20.80%, ahead of the FTSE UK Growth index at 6.63%.
Annual percentage growth
Sep 20 – Sep 21 | Sep 21 – Sep 22 | Sep 22 – Sep 23 | Sep 23 – Sep 24 | Sep 24 – Sep 25 | |
|---|---|---|---|---|---|
FTSE 100 | 25.36% | 0.90% | 14.66% | 12.39% | 17.53% |
FTSE 250 ex ITs | 40.85% | -26.79% | 13.62% | 21.41% | 6.69% |
FTSE Small Cap ex ITs | 72.45% | -24.37% | 12.72% | 22.38% | 6.36% |
FTSE UK Value | 33.18% | 3.36% | 17.86% | 12.90% | 20.80% |
FTSE UK Growth | 8.72% | -5.63% | 11.16% | 14.45% | 6.63% |
The last three-month period saw the FTSE 100 experience its best quarter since late 2022, with a weakening British Pound providing a tailwind to UK listed businesses exporting internationally.
How have the UK Wealth Shortlist funds performed?
Our Wealth Shortlist selections delivered mixed performance over the past year, and we tend to expect this from such a wide range of funds.
Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives align with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a long-term diversified portfolio.
For more details on each fund and its risks and charges, see the links to their factsheets and key investor information.
UK Growth
The best-performing fund in the UK Growth section of the Wealth Shortlist over the last year was the Fidelity Special Situations fund, managed by Alex Wright.
Wright's contrarian approach and focus on unloved companies differentiates the fund from lots of its peers.
He’s well supported by co-manager Jonathan Winton and Fidelity’s extensive analyst team. We think the fund has good growth potential over the long term.
The fund invests in smaller companies and derivatives both of which add risk.
Meet the manager: Fidelity Special Situations
The weakest performer of our selections in the UK Growth sector was Aegon Ethical Equity. The fund has been managed by experienced investor, Audrey Ryan, since 1999.
The fund invests in UK companies using an 'exclusions-based' approach, avoiding those involved in activities deemed unethical.
This way of investing means the fund has a bias towards higher-risk small and medium-sized companies. As these companies tend to rely more heavily on the health of the UK economy, it makes them riskier.
This, combined with the fund's lack of exposure to industries like oil & gas and tobacco, means its performance can be different to more conventional UK equity funds.
Meet the manager: Aegon Ethical Equity
Annual percentage growth
Sep 20 – Sep 21 | Sep 21 – Sep 22 | Sep 22 – Sep 23 | Sep 23 – Sep 24 | Sep 24 – Sep 25 | |
|---|---|---|---|---|---|
Fidelity Special Situations | 46.97% | -9.55% | 14.51% | 19.66% | 18.70% |
Aegon Ethical Equity | 30.05% | -27.68% | 10.37% | 25.47% | -0.71% |
FTSE All Share | 27.89% | -4.00% | 13.84% | 13.40% | 16.17% |
UK Equity Income
Artemis Income, managed by Adrian Frost, Nick Shenton and Andy Marsh, was the best performing of our UK equity income funds selected on the Wealth Shortlist over the last year.
The fund aims to outperform the FTSE All-Share over the long term, while providing a growing income and a dividend yield above what’s offered by the index, through mainly investing in larger companies.
We have a high level of conviction in all three experienced co-managers who have been investing through good times and bad and are one of the best teams in the business in our view.
The fund takes charges from capital, which could boost income, but reduces the potential for capital growth.
Meet the manager: Artemis Income
The weakest of our UK Equity Income fund selections was Troy Trojan Income.
The fund tends to be concentrated with between 35 and 50 investments, which means each one can have a meaningful effect on performance – though this approach increases risk.
We expect the fund to hold up better than the index in falling markets given its focus on quality, but expect it to lose ground relative to the index in a rising market.
The fund takes charges from capital, which could boost income, but reduces the potential for capital growth.
Sep 20 – Sep 21 | Sep 21 – Sep 22 | Sep 22 – Sep 23 | Sep 23 – Sep 24 | Sep 24 – Sep 25 | |
|---|---|---|---|---|---|
Artemis Income | 27.7% | -6.36% | 16.16% | 18.42% | 17.77% |
Troy Trojan Income | 9.32% | -10.40% | 6.86% | 11.64% | 1.14% |
FTSE All Share | 27.89% | -4.00% | 13.84% | 13.40% | 16.17% |
UK small & medium sized companies
The strongest performer in the UK Small and Medium-sized section of the Wealth Shortlist over the past year was the HSBC FTSE 250 index fund.
The fund offers a simple, low-cost way to track the FTSE 250 excluding Investment Trusts and is run by HSBC, a provider of index trackers for over 35 years.
The fund’s low charges should continue to help it track the FTSE 250 Index closely.
The fund invests in smaller companies and participates in securities lending, both of which add risk.
The worst-performing fund in the UK Small and Medium-sized section of the Wealth Shortlist was the FTF ClearBridge UK Mid Cap fund, managed by Richard Bullas.
The fund invests in medium-sized companies, often considered the ‘sweet spot’ between company growth potential and maturity. Investing in small and medium sized companies is higher risk – so investors should invest for the long term and be prepared for volatility along the way. The fund is concentrated which also adds risk.
Sep 20 – Sep 21 | Sep 21 – Sep 22 | Sep 22 – Sep 23 | Sep 23 – Sep 24 | Sep 24 – Sep 25 | |
|---|---|---|---|---|---|
HSBC FTSE 250 | 37.83% | -24.53% | 10.30% | 18.66% | 7.46% |
FTF ClearBridge UK Mid Cap | 41.06% | -29.32% | 15.81% | 16.61% | -4.56% |
FTSE 250 ex IT index | 40.85% | -26.79% | 13.62% | 21.41% | 6.69% |