One of the major events in the latter stages of 2025 saw Chancellor Rachel Reeves deliver her Autumn Budget. Rumours persisted in the run up to the formal announcement at the end of November, especially about the current state of the UK’s finances.
There was plenty of noise prior to the Budget suggesting that increases to income tax, value added tax (VAT) or national insurance (NI) were on the horizon.
In the end, none of these changed.
Rather than headline-grabbing changes, the Chancellor mainly focused on smaller things at the fringes of policy.
The freeze on income tax thresholds will continue and there was a change to the rules around salary sacrifice for pension contributions, although it won’t come into force until 2029. For savers and investors, there were adjustments to the Cash ISA allowance and a decrease in the tax exemption available for Venture Capital Trust (VCT) investments.
Either side of the budget, there were mixed results from UK economic indicators to close out 2025.
The UK’s latest inflation figures saw a slowing in the rate of price rises. Inflation over the 12 months to November 2025 was 3.2%, a decrease from 3.6% the previous month. While still above the Bank of England’s 2% target, the drop was enough for the central bank to lower interest rates to 3.75% in December.
Unemployment in the UK also remains stubbornly high, with the latest data showing the rate increase to 5.1%. December saw a modest uptick in consumer confidence, although it remains subdued.
This article isn’t personal advice. Investments rise and fall in value, meaning you could get back less than you invest. Remember, past performance isn’t a guide to the future. Yields are variable, and income isn’t guaranteed. If you’re not sure if an investment is right for you, ask for financial advice.
How has the UK stock market performed?
2025 was a positive year for UK markets. However, the extent of that positivity depended on the style of investing, with notable dispersions between different areas of the market.
The FTSE 100, representing the largest companies in the UK, grew 25.82%* in 2025. This comfortably beat both the FTSE 250 ex Investment Trusts and FTSE Small Cap ex Investment Trusts indices, which returned 12.53% and 10.89% respectively.
This is a useful reminder that the stock market can perform differently to the economy. The FTSE 100 contains many companies that carry out business all over the world, so are less reliant on a strong UK economy in order to succeed.
There was also a stark difference in performance between growth and value companies, with the latter outperforming significantly. For value investors, banks continued their strong run and returned 68.44% over the year. Interest rates remaining elevated provided a boost to the sector.
Strong performance over the year wasn’t enough to stop large outflows from the UK stock market though. In 2025, investors withdrew over £9bn from funds invested in the UK.
The early days of 2026 has seen market positivity continue, with the FTSE 100 hitting the psychological milestone of 10,000 for the first time on 2 January.
Annual percentage growth
Dec 2020 – Dec 2021 | Dec 2021 – Dec 2022 | Dec 2022 – Dec 2023 | Dec 2023 – Dec 2024 | Dec 2024 – Dec 2025 | |
|---|---|---|---|---|---|
FTSE 100 | 18.44% | 4.70% | 7.93% | 9.66% | 25.82% |
FTSE 250 ex ITs | 18.36% | -18.44% | 10.03% | 8.42% | 12.53% |
FTSE Small Cap ex ITs | 31.26% | -17.31% | 10.37% | 13.78% | 10.89% |
FTSE UK Growth | 16.67% | -3.90% | 6.71% | 10.48% | 10.92% |
FTSE UK Value | 19.03% | 8.83% | 10.09% | 11.00% | 29.00% |
FTSE All Share/Banks | 25.70% | 12.38% | 18.95% | 42.70% | 68.44% |
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, making sure any new investment forms part of a long-term diversified portfolio.
For more details on each fund, its charges and specific risks, see the links to their factsheets and key investor information.
UK Growth
The top performing UK Growth fund on the Wealth Shortlist over the past year was the L&G UK 100 index.
The fund provides a low-cost and straightforward way to invest in the FTSE 100 – an index of the largest companies in the UK. Legal & General have been running passive funds for over 30 years and are one of the largest providers of such funds in the UK. The team’s process, combined with low charges, should help the fund to efficiently track the index.
The weakest performer was Liontrust UK Growth.
Managed by Anthony Cross, Victoria Stevens, and Matthew Tonge, the fund invests in companies the team believe have an ‘economic advantage’, like a strong customer base or intellectual property like patents.
The fund has no exposure to banks, which have been a significant contributor to market and sector returns over the past few years. Recent relative performance has been challenging, but the team remain confident in the prospects for the companies they invest in.
The fund has the flexibility to invest in smaller companies and derivatives which if used, adds risk.
Dec 2020 – Dec 2021 | Dec 2021 – Dec 2022 | Dec 2022 – Dec 2023 | Dec 2023 – Dec 2024 | Dec 2024 – Dec 2025 | |
|---|---|---|---|---|---|
L&G UK 100 | 17.36% | 5.18% | 7.53% | 9.49% | 25.58% |
Liontrust UK Growth | 20.95% | -1.09% | 4.71% | 4.62% | 1.85% |
IA UK All Companies | 17.12% | -9.28% | 7.26% | 8.09% | 15.14% |
UK Equity Income
Artemis Income was the best performing of the UK equity income funds on our Wealth Shortlist over the last year. The fund is managed by Adrian Frost, Nick Shenton and Andy Marsh.
The managers aim to outperform the FTSE All-Share over the long term through mainly investing in larger companies, while providing a growing income and a dividend yield above that offered by the index.
We have a high level of conviction in all three experienced co-managers, who have been investing through good times and bad, and we regard them as one of the best teams in the business.
The fund takes charges from capital, which could boost income, but reduces the potential for capital growth.
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 we don’t expect it to perform as strongly as the index in a rising market.
The fund takes charges from capital, which could boost income, but reduces the potential for capital growth.
Dec 2020 – Dec 2021 | Dec 2021 – Dec 2022 | Dec 2022 – Dec 2023 | Dec 2023 – Dec 2024 | Dec 2024 – Dec 2025 | |
|---|---|---|---|---|---|
Artemis Income | 16.17% | 0.40% | 9.78% | 15.12% | 21.69% |
Troy Trojan Income | 15.73% | -12.38% | 5.26% | 6.64% | 2.97% |
IA UK Equity Income | 18.41% | -1.93% | 7.03% | 8.82% | 18.49% |
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 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 FTSE 250 includes a number of investment trusts, some of which invest in higher-risk emerging markets.
The worst performing of our selections in the sector was Royal London UK Smaller Companies.
The fund is managed by Henry Lowson, with support from deputy manager Henry Burrell.
The managers search for smaller companies they believe have significant growth potential. This part of the market is often under-researched but is also a higher risk place to invest.
The managers take a long-term view and assess companies using the acronym ‘SIMBA’ – scalability, innovation, management, barriers to entry and unique assets. They require companies possess at least four of these characteristics to be considered for investment.
Dec 2020 – Dec 2021 | Dec 2021 – Dec 2022 | Dec 2022 – Dec 2023 | Dec 2023 – Dec 2024 | Dec 2024 – Dec 2025 | |
|---|---|---|---|---|---|
HSBC FTSE 250 | 16.61% | -17.38% | 7.81% | 7.77% | 12.67% |
Royal London UK Smaller Companies | 25.77% | -30.88% | 3.72% | 3.51% | -3.05% |
IA UK Smaller Companies | 22.82% | -25.67% | 0.22% | 6.27% | 4.08% |