FTSE100 best single year return since 2009.

GeoffTF

This board was full of people convinced that a home bias was a very bad idea, and then this happens.

masonic

GeoffTF said:

This board was full of people convinced that a home bias was a very bad idea, and then this happens.

Home bias in the form of the FTSE 250 wasn't so harmful, but the FTSE 100 still has a lot of catching up to do:

It's interesting that things started to go off the rails for the UK vs ROW from 2015. I suppose it gives some hope that the factors causing the UK to start lagging behind could change.

Altior

It is somewhat distorted by the influence of US in the 'World' element.

Personally I wouldn't be an advocate of buying and holding the 100 as an index. As people will be well aware, it's more tilted toward a global value play, whereas the 250 is more representative of the UK domestically. Plus of course, the major exchange rate has a significant impact on the 100. It's not a linear distinction, but the 100 is broadly more of a global play. 

GeoffTF

masonic said:

GeoffTF said:

This board was full of people convinced that a home bias was a very bad idea, and then this happens.

Home bias in the form of the FTSE 250 wasn't so harmful, but the FTSE 100 still has a lot of catching up to do: ...

It's interesting that things started to go off the rails for the UK vs ROW from 2015. I suppose it gives some hope that the factors causing the UK to start lagging behind could change.

It helps to only have a home bias at the right times. A low valuation is a good indicator. The obvious thing that happened in 2016 is not likely to be reversed any time soon. Nonetheless, with the US market still sky high, I am inclined to stick with a modest home bias for now.

dunstonh

It's interesting that things started to go off the rails for the UK vs ROW from 2015. I suppose it gives some hope that the factors causing the UK to start lagging behind could change.

Brexit killed the mid and small cap.

Altior

dunstonh said:

It's interesting that things started to go off the rails for the UK vs ROW from 2015. I suppose it gives some hope that the factors causing the UK to start lagging behind could change.

Brexit killed the mid and small cap.

The vote outcome?

There was a shift in the EUR exchange rate, and perhaps the equities markets anticipated/priced in the wrong result. But nothing changed in practice for many years (ergo 2020). Arguably not much has changed in practice at all, something a little more significant did happen in 2020 (coinciding with the UK leaving the EU). 

masonic

GeoffTF said:

masonic said:

GeoffTF said:

This board was full of people convinced that a home bias was a very bad idea, and then this happens.

Home bias in the form of the FTSE 250 wasn't so harmful, but the FTSE 100 still has a lot of catching up to do: ...

It's interesting that things started to go off the rails for the UK vs ROW from 2015. I suppose it gives some hope that the factors causing the UK to start lagging behind could change.

It helps to only have a home bias at the right times. A low valuation is a good indicator. The obvious thing that happened in 2016 is not likely to be reversed any time soon. Nonetheless, with the US market still sky high, I am inclined to stick with a modest home bias for now.

The UK Dividend Stocks blog does an infrequent valuation analysis on the UK indices, although the last one was a year ago.

At least as far as CAPE is concerned, the FTSE100 has been a similar level of cheap since the GFC. Home bias then didn't pay off.

It's getting harder to find up to date data, but Monevator recently blogged on CAPE ratio by country and that put the UK at fair value as of October 2025.

So I do not think it is something you can market time.

That said, the US valuation (and proportion of the global index) is extreme enough for me to tilt away from it, but into ROW rather than UK specifically. I've never overweighted the UK by market cap, but in the past I have done very well out of a satellite group of UK small cap investment trusts, but gradually cut these down in more recent years. I am not convinced the conditions where they would flourish again will be seen in the short term, and I'm probably getting to the point I shouldn't be adding unneeded risk to my portfolio.

masonic

Altior said:

dunstonh said:

It's interesting that things started to go off the rails for the UK vs ROW from 2015. I suppose it gives some hope that the factors causing the UK to start lagging behind could change.

Brexit killed the mid and small cap.

The vote outcome?

There was a shift in the EUR exchange rate, and perhaps the equities markets anticipated/priced in the wrong result. But nothing changed in practice for many years (ergo 2020). Arguably not much has changed in practice at all, something a little more significant did happen in 2020 (coinciding with the UK leaving the EU). 

Looking at the FTSE250 chart, I'd say it was late 2021 onwards where it took a real beating, which coincides with the inflation episode. One can argue whether or not the impact of that was worsened by Brexit, but I think it is small caps that tend to bear the brunt in such situations.

Altior

masonic said:

Altior said:

dunstonh said:

It's interesting that things started to go off the rails for the UK vs ROW from 2015. I suppose it gives some hope that the factors causing the UK to start lagging behind could change.

Brexit killed the mid and small cap.

The vote outcome?

There was a shift in the EUR exchange rate, and perhaps the equities markets anticipated/priced in the wrong result. But nothing changed in practice for many years (ergo 2020). Arguably not much has changed in practice at all, something a little more significant did happen in 2020 (coinciding with the UK leaving the EU). 

Looking at the FTSE250 chart, I'd say it was late 2021 onwards where it took a real beating, which coincides with the inflation episode. One can argue whether or not the impact of that was worsened by Brexit, but I think it is small caps that tend to bear the brunt in such situations.

That was the broad situation globally re small caps, from my recollection, the unwinding of QE and lockdowns, high inflation as you say and normalisation of interest rates. The nature of equities isn't it, nothing much happens in isolation. There is a political element (as there often is) as there were convenient things to blame negative impacts on. 

Altior

For what it's worth I am (almost!) completely de-risked, now even from domestic ITs. I have a toe in (about 10% of my portfolio value), and that's about it. Yes that is a risk in of itself, but I have the patience to wait for another buying opportunity.