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At first of 2025, there was no particular motive to count on that the FTSE 100 index of main British shares would get pleasure from a rip-roaring 12 months.
Alongside the way in which, there have been some causes for concern, not least market response to April’s announcement of latest US tariff insurance policies.
Nonetheless, the blue-chip index has racked up a 17% achieve in worth to date this 12 months. For an index of huge corporations, a lot of them in mature industries, I believe that’s spectacular. May it nonetheless be price my time investing within the index now, after that achieve, for instance by shopping for shares in an index tracker?
Issues could proceed effectively
I believe it could possibly be, however I don’t plan to! I’ll clarify beneath what I’m doing as a substitute. However first, why do I believe there may probably be advantage to the concept of me investing within the index even now?
Put merely, I’m a believer in long-term investing.
The FTSE 100 index contains lots of the nation’s greatest corporations. From a long-term perspective I’m bullish concerning the outlook for the UK economic system and subsequently for the index too. Within the short-to-medium-term, after all, issues may go both approach. However I do see an argument for the index to maintain rising.
In spite of everything, it stays extra cheaply valued that its US counterpart. This 12 months’s efficiency has confirmed that even a reasonably sluggish British economic system needn’t maintain the index again.
I’m shopping for particular person shares
Nonetheless, there may be additionally a viewpoint that the 17% achieve is tough to justify given the general financial efficiency this 12 months — and the outlook for 2026 and past.
If the worldwide economic system enters a tough patch, I count on that will have a unfavorable affect on the FTSE 100. So as a substitute of investing in an index tracker, I proceed to search for particular person shares to purchase.
One share I’ve been shopping for this 12 months
Given how effectively the FTSE 100 has finished this 12 months, have all its constituent members additionally finished effectively?
Definitely not! For instance, brewer and distiller Diageo (LSE: DGE) has had a torrid 2025 to this point, shedding 35% of its worth and a chief government as well.
There are short-term worries about weak spirits gross sales in lots of markets, threatening earnings. However there may be additionally an even bigger image concern troubling many buyers’ minds: what declining alcohol consumption charges amongst youthful generations may imply for beer and spirits gross sales.
Certain, Diageo has developed alcohol-free variations of iconic manufacturers like Guinness and Gordon’s, in addition to buying non-alcoholic manufacturers Seedlip and Ritual Zero Proof (higher identified to American drinkers than Britons, underlining Diageo’s world attain).
However will that be sufficient to assist maintain revenues and earnings, in addition to help the dividend? In spite of everything, Diageo is one in all only some FTSE 100 members to have grown its dividend per share yearly for many years.
I hope will probably be sufficient. With distinctive manufacturers, a big distribution community and deep relationships within the drinks business, I’m optimistic about Diageo’s outlook.
Certainly, I’ve added the share to my portfolio this 12 months.
