23rd February 2015
The December 1999 all-time high of the FTSE 100 when it hit 6,930 has become a major psychological barrier for investors in recent years writes Adrian Lowcock, head of investing at AXA Wealth.
In the past two years the FTSE 100 has repeatedly come close to reaching a new all-time high’s and on 20 separate trading days it has come within 100 points. Each time it has been close to the all-time high level, the market has pulled back.
However, when looking at the FTSE 100 with dividends included, the FTSE 100 reached a new all-time high on January 2006 and has been repeatedly doing so since then.
An agreement with Greece to extend its current bailout by four months, a boost to the UK economy from lower oil prices and improved economic outlook could mean that 2015 is finally the year the FTSE 100 breaks through the barrier.
Once through the market may well go on to set repeatedly new highs as we have seen happen in both the S&P 500 and the UK’s own FTSE 250 in recent years.
Power of dividends
Even though the FTSE has not obtained a fresh all-time high in 15 year’s investors have been benefiting from dividend growth. With dividends reinvested the FTSE 100 has returned 66.28%. £10,000 invested on 31 December 1999 would be worth £16,694 today.
Changing face of the FTSE 100
The FTSE 100 index is just a snapshot of the UK 100 largest listed companies on the stock market and does not necessarily reflect the full potential for investment returns. In the last 15 years the FTSE 100 has experienced some major events such as the dotcom bubble, two bull and two bear markets as well as the financial crisis, which has resulted in a significantly different index today.