Let’s start by taking a look at exactly why the UK has underperformed by comparing the FTSE 100 to the global MSCI World index. The former contains the biggest 100 companies on the UK stock market, and the latter contains nearly 1500 companies from 23 developed markets. Both indices are market-cap weighted, meaning that the bigger companies are ascribed bigger weightings. If we include dividends, the performances of these indices for much of the last four decades have actually been pretty similar. In fact, the FTSE was in the lead from 1986 to 2019. It was in the pandemic era that the global index pulled ahead, when investors expressed a preference for Big Tech and so-called mega cap companies.
