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It’s been a risky yr in inventory markets around the globe. From tariff scares via to financial coverage shifts, traders have been left attempting to dodge market corrections and punctiliously navigate which shares to purchase and which to keep away from. But when an investor had determined to park £10k in a tracker fund of both the FTSE 100 or the US inventory market, which one would have paid off higher?
A good end result
To date this yr, the FTSE 100 is up 17.3%. By comparability, the S&P 500 is up 16.2%. Though some may be shocked, this implies the UK inventory market has outperformed its US cousin as we hit December. By way of the numbers, it might imply an investor could be sitting on an unrealised revenue of £1,730 or £1,620, relying on the place the funds have been allotted.
There are some causes to notice concerning the distinction in returns. One issue pertains to the optimistic shock from the UK’s financial efficiency. Coming into the yr, there have been considerations that we might head right into a recession. This hasn’t occurred, and though the economic system isn’t firing on all cylinders, it hasn’t been a catastrophe.
The US is dwelling to most main AI and tech corporations, which have pushed a lot of the index’s positive factors in 2025. Other than these key sectors, there haven’t been many others price shouting about. Due to this fact, though the US index has accomplished effectively, it hasn’t been supported by all areas.
Lastly, some traders have actively sought to purchase shares outdoors the US on account of considerations about US commerce coverage. In consequence, I believe among the cash stream has gone out of the S&P 500 and into the FTSE 100.
Taking a look at 2026
Subsequent yr, I believe the FTSE 100 might proceed to do effectively. Nonetheless, as an alternative of shopping for an index tracker, I believe particular person shares might do even higher. For instance, somebody might take into account Subsequent (LSE:NXT). The UK retailer has seen its share value bounce 43% within the final yr.
Monetary efficiency has been a key driver within the transfer. Again in March, annual outcomes confirmed a pre-tax revenue of over £1bn, the primary time it handed that milestone. Quick ahead to October, and it raised its full-year revenue steering once more, displaying that over the course of 2025, issues have progressed even additional.
On-line gross sales are driving this development, as is worldwide growth. This is the reason I believe it may possibly do effectively subsequent yr. Though the outlook for the UK excessive road remains to be difficult, Subsequent is turning into increasingly diversified. That is taking place each geographically and throughout completely different channels (on-line, retailer, third-party manufacturers).
Whereas many UK retailers have struggled on account of weak client confidence and price pressures, Subsequent has managed to develop. It is a inexperienced flag for subsequent yr, displaying resilience in a difficult retail setting.
One danger is that competitors on this house is all the time excessive, that means each season is essential to staying forward and avoiding a minefield of vogue missteps. Any errors right here might prohibit the additional tempo of development.
Even with this concern, I believe Subsequent is a inventory to contemplate shopping for as a part of a continued outperformance of the UK versus the US.
