The first half of 2025 has been volatile. The ripple effect of the manner in which US policy is conducted has had implications for markets around the world, and the UK is no different.
Following the latest round of tariff announcements and negotiations, the UK, at least on a relative basis, looks to have ended up in a decent position. But things can change quickly as we’ve seen.
With an elevated level of uncertainty, it’s no surprise that economic data has been mixed – for consumers, businesses and policymakers. And uncertainty often means decision making is delayed, hitting demand and growth prospects.
The economic growth the government says it’s trying to encourage is proving elusive, with the economy shrinking in size in both April and May.
As growth remains sluggish, inflation is still above the Bank of England’s 2% target.
Inflation in the UK rose by 3.6% in the 12 months to June 2025, driven by increases in the cost of food and fuel, and up from 3.4% in May.
Despite these economic jitters, the UK stock market continues to perform well, with the FTSE 100 recently hitting a new all-time high.
And with Rachel Reeves looking to get more of the public investing, this and consumer confidence could be key to unlocking further gains.
This article isn’t advice. Investments will 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.
A cautious UK consumer
There are reasons to be positive about the future of the UK stock market and how much UK consumers are saving can help tell the story.
The savings rate figure, which represents the percentage of household income after taxes and benefits which is saved and not spent, stands at 10.9%.
It’s at a higher level compared to the last 10 years (excluding the start of the pandemic) and compares to just 4.5% in the US.
ONS analysis shows much of these savings in recent years have been held as cash rather than invested, suggesting British households are in wait and see mode.
As a result, any pickup in UK consumer confidence and spending could fuel growth. And smaller companies could be the key beneficiaries, given they make more of their money within UK borders, than larger companies do.
How has the UK stock market performed?
Over the last year, smaller companies listed in the UK, represented by the FTSE Small Cap index, have been the best-performing part of the stock market.
They rose by 13.10%*, outpacing the 11.30% return from the FTSE 100, representing the largest 100 companies listed in the UK, and the 10.25% return from medium-sized companies.
As a style, value worked better than growth, with the FTSE UK Value index delivering gains of 14.25%, ahead of the FTSE UK Growth index at 4.16%.
Annual percentage growth
Jun 20 – Jun 21 | Jun 21 – Jun 22 | Jun 22 – Jun 23 | Jun 23 – Jun 24 | Jun 24 – Jun 25 | |
|---|---|---|---|---|---|
FTSE 100 | 18.01% | 5.76% | 9.15% | 12.79% | 11.30% |
FTSE 250 | 33.44% | -14.59% | 1.87% | 13.93% | 10.25% |
FTSE Small Cap | 65.20% | -14.64% | -0.35% | 18.54% | 13.10% |
FTSE UK Growth | 9.50% | -3.17% | 13.75% | 8.98% | 4.16% |
FTSE UK Value | 20.38% | 9.59% | 7.95% | 15.51% | 14.25% |
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 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, 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. And we think the fund has good growth potential over the long term.
The fund invests in higher-risk smaller companies, and the manager has the flexibility to invest in derivatives which, if used, can also add risk.
Meet the lead manager of Fidelity Special Situations fund
The weakest performer of our selections in the UK Growth sector was Liontrust UK Growth.
The fund has no exposure to banks, which has 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.
Meet the co-manager of Liontrust UK Growth fund
Annual percentage growth
Jun 20 – Jun 21 | Jun 21 – Jun 22 | Jun 22 – Jun 23 | Jun 23 – Jun 24 | Jun 24 – Jun 25 | |
|---|---|---|---|---|---|
Fidelity Special Situations | 36.00% | -1.51% | 5.72% | 19.08% | 17.70% |
Liontrust UK Growth | 17.97% | 1.70% | 5.42% | 11.76% | -0.20% |
FTSE All Share | 21.45% | 1.64% | 7.89% | 12.98% | 11.16% |
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.
Meet the co-manager of Artemis Income fund
The weakest of our UK Equity Income fund selections was 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
Both funds take charges from capital, which could boost income, but reduces the potential for capital growth.
Annual percentage growth
Jun 20 – Jun 21 | Jun 21 – Jun 22 | Jun 22 – Jun 23 | Jun 23 – Jun 24 | Jun 24 – Jun 25 | |
|---|---|---|---|---|---|
Artemis Income | 23.18% | -0.21% | 8.24% | 18.40% | 18.26% |
Trojan Income | 8.32% | -6.80% | 4.04% | 6.52% | 7.11% |
FTSE All Share | 21.45% | 1.64% | 7.89% | 12.98% | 11.16% |
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 Legal & General UK Mid Cap index fund.
The fund offers a simple, low-cost way to track the FTSE 250 excluding Investment Trusts and is run by Legal & General, one of the UK’s leading providers of passive funds.
Given Legal & General’s size, experience and expertise running index tracker funds, we expect the fund to continue to track the index closely in the future, though there are no guarantees.
The worst-performing fund in the UK Small and Medium-sized section of the Wealth Shortlist was the FTF Martin Currie 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. The fund didn’t invest in a number of companies that were taken over through 2024, posing a headwind to performance.
Investing in smaller 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.
Meet the lead manager of FTF Martin Currie UK Mid Cap fund
Annual percentage growth
Jun 20 – Jun 21 | Jun 21 – Jun 22 | Jun 22 – Jun 23 | Jun 23 – Jun 24 | Jun 24 – Jun 25 | |
|---|---|---|---|---|---|
Legal & General UK Mid Cap Index | 36.17% | -16.58% | 3.03% | 15.54% | 11.03% |
FTF Martin Currie UK Mid Cap | 30.40% | -18.06% | 4.33% | 13.48% | 0.26% |
FTSE 250 ex ITs | 36.71% | -16.10% | 2.95% | 15.10% | 11.59% |