The FTSE 100, now above 10,000, has come storming back into fashion. From the trailer trash relation in the global equity markets family, investors are now welcoming it back like the prodigal son.
The UK’s blue-chip benchmark’s 22% rally through 2025, and 2%-plus into 2026, puts many other global indices to shame.
Investing in ETFs offers instant diversification in a low-cost package, making them a popular choice for those interested in the FTSE 100.
| Market | 2025 performance |
| FTSE 100 | 21.8% |
| MSCI World | 21.6% |
| FTSE All-Share | 20.1% |
| Nasdaq Composite | 17.8% |
| Eurostoxx 600 | 17.0% |
| S&P 500 | 14.7% |
| FTSE 250 | 9.7% |
Source: Google Finance
Having taken almost eight years to go from 7,000 to 8,000, it has scorched past 9,000 and 10,000 points inside a year.
Gold, defence and dividends
Gold, defence and dividends have fuelled the run to record highs of 10,140.70 (close on 12 Jan).
Investors have sought a margin of safely alongside higher-risk, higher-return US stocks with socio-economic turmoil seemingly lurking round every corner.
Record highs were reported for AstraZeneca (AZN), Rolls-Royce (RR.), Next (NXT) and HSBC (HSBA) as almost half the stocks in the FTSE 100 registered gains of 20% or more.
Lenders Lloyds Banking (LLOY), Barclays (BARC), and NatWest (NWG) were joined by defence giant BAE Systems (BA.) in chalking up gains of 50% or more last year, making 2025 a vintage year for blue chips.
More to come?
Whether the FTSE 100 can continue its rampant rise through the rest of 2026 is a major question that we can only speculate about.
However, the foundations are there for more investment capital flows to find a home in Britain’s blue chips.
Tapping this potential presents investors with multiple options. UK focused active funds and investment trusts will be a popular option, allowing investors to lean on the expertise and experience of a professional stock picking team.
Handpicking individual shares in which to invest will suit many more experienced investors. This option provides access to sectors, industries and individual companies whose potential you like while eschewing those you don’t.
But perhaps the easiest route will be ETFs, which offer instant diversification in one low-cost package.
There are several UK ETF options: FTSE 250 Mid-caps, UK Small-caps, or the FTSE All-Share.
The latter will give you exposure to both medium and smaller companies, but with a heavy lean into FTSE 100 blue-chips.
This is where we think the majority of new UK equity capital will probably find its way – to exclusive FTSE 100 ETFs – and that’s where we are going to concentrate.
FTSE 100 ETF options
Data provider JustETF lists 11 FTSE 100 ETF tracker funds, designed to roughly match the index’s performance.
These come from well-known ETF providers like iShares, Vanguard, HSBC, Xtrackers, Amundi, UBS and Invesco.
As you would expect, there’s little to separate FTSE 100 ETFs by 2025 performance.
Marginal differences are likely to be impacted by things like economies of scale, driven by fund size.
This is illustrated by lower cost ETFs populating many of the spots towards the top of the performance table, those with higher costs nearer bottom, although the apparent correlation maybe merely anecdotal.
FTSE 100 ETFs
| ETF | Size | TER | 2025 perf | 5-year perf |
| HSBC FTSE 100 (Dis) | £686m | 0.07% | 25.65% | 83.56% |
| iShares Core FTSE 100 (Acc) | £2,791m | 0.07% | 25.64% | 83.45% |
| iShares Core FTSE 100 (Dis) | £14,118m | 0.07% | 25.63% | 83.53% |
| Invesco FTSE 100 (Acc) | £29m | 0.09% | 25.53% | 82.56% |
| Vanguard FTSE 100 (Acc) | £2,228m | 0.09% | 25.65% | 83.51% |
| Vanguard FTSE 100 (Dis) | £4,211m | 0.09% | 25.69% | 83.58% |
| Xtrackers FTSE 100 (Acc) | £83m | 0.09% | 25.66% | 83.27% |
| Xtrackers FTSE 100 (Dis) | £79m | 0.09% | 25.60% | 83.50% |
| Amundi Core FTSE 100 Swap (Acc) | £733m | 0.14% | 25.81% | 82.65% |
| Amundi Core FTSE 100 Swap (Dis) | £46m | 0.14% | 25.80% | 83.08% |
| UBS FTSE 100 (Dis) | £79m | 0.20% | 25.48% | 82.26% |
Source: JustETF
Even over a longer timeframe, say 5-years, only 1.32 percentage points separate performance, although this could add up over many years.
For example, if we were to extend the best and worst 5-year performance over, say, 30 years, the returns gap would stretch to 7.92 percentage points.
What would this do to long-run returns? It would widen the gap… 501.48% total return at the top end versus 493.56% at the bottom.
Effectively, £10,000 invested and left untouched over 30 years would increase to £60,148 at the top end, or £59,356 at the lower end, a difference of £792, little more than a rounding error by the time you consider things like inflation.
Which ETF to pick
In the absence of more compelling evidence that long-run returns will be impacted by scale or cost, picking one of the lower cost FTSE 100 ETF options seems very sensible. Why pay more for, by and large, the same performance?
But there are other considerations. For example, you may have invested with a particular fund management company before – familiarity can breed confidence.
If sticking with who you know makes you feel more comfortable with your decision, there appears little reason not to do this.
Alternatively, scale is worth thinking about. As popularised by James Surowiecki’s book The Wisdom of Crowds, it suggests that by aggregating varied inputs (like guesses in a contest), errors cancel out, leading to surprisingly smart collective decisions in problem-solving, innovation, and forecasting.
Scale may also lend itself to survival. For example, the Invesco FTSE 100 ETF has been around since 2009 yet has attracted just £29 million of investor funds.
It’s not impossible that at some point, Invesco could decide running the ETF simply isn’t worth its while and pull the plug, thus forcing investors to shift their investment elsewhere.
That’s an outcome unlikely to see the light of day at, say, the iShares Core FTSE 100 ETF, by far the largest with more than £14.1 billion of investor funds.
Think about dividends
Finally, make sure you select the right unit type – accumulating or distributing. Accumulating units, often noted as Acc, will automatically reinvest any dividends paid by the underlying assets into more units in the ETFs, creating a potentially valuable compound effect.
Distributing units, or Dis, payout those dividends to you, typically once or twice a year, perhaps a better solution for investors already living off their accumulated portfolio savings.
Three low-cost options
Costs among FTSE 100 ETFs range from 0.07% to 0.20% a year, measured by the TER, or the total expense ratio. As we explained previously, in the absence of a better way to pick which ETF, overall cost appears to be a sensible way to tilt the balance.
Below we give a brief description of three of the lowest TER ETFs, but investors should consider the wider list before making their own decision.
HSBC FTSE 100 ETF (HUKX) £101.54
The HSBC FTSE 100 ETF offers one of the cheapest ways to invest in the blue-chip index, with a TER of 0.07% a year. The ETF replicates the performance of the underlying index by full replication (buying all the index constituents).
This a distributing ETF, which means it has a policy to distribute dividends earned to investors twice a year.
The HSBC FTSE 100 ETF was launched in 2009 and is a medium-sized ETF, with £686 million of assets under management.
iShares Core FTSE 100 ETF (CUKX) £203.82
One of the vast iShares family of ETFs, owned by BlackRock, the iShares Core FTSE 100 ETF is, like its HSBC cousin, another FTSE 100 Index full replication option.
Costs also match the HSBC ETF, with a TER running at 0.07% a year, making this pair the two cheapest ways track the UK blue-chip index. What separates the two is that the iShares ETF offers investors both distributing (Dis) and accumulation (Acc) units, giving investors that extra choice over dividend income.
The iShares Core FTSE 100 ETF is very large ETF with more than £2.79 billion of assets under management in the Acc units, more than £14.1 billion in the Dis units. The ETF was launched in January 2010.
Invesco FTSE 100 ETF (S100) £110.13
Like the previous two, the Invesco FTSE 100 ETF seeks to track the FTSE 100 index, but it does so synthetically by using financial products called swaps. These total return swaps are taken out with another financial institution on the understanding that it will exchange the performance of a separate basket of securities (collateral) for the desired index’s return, minus fees.
Ultimately, it allows the Invesco FTSE 100 ETF to track the index without ever owning the actual underlying stocks.
The Invesco ETF’s TER stands at 0.09% a year, and while modestly higher than the previous two, that’s still way down the low-cost end of the fees range.
Another key difference is that dividends earned by the ETF are accumulated and reinvested. But, as we pointed out earlier in this feature, it does face possible scale issues, having attracted only £29 million of investor funds since launching in 2009.
These passive index ETFs are generally favoured for their low costs, which help minimise the impact of fees on long-term returns. You ca typically invest in these and other similar low-cost funds through any decent investment platform.
But remember, past performance is never a guarantee for future returns.
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Disclaimer: This content is for information only and is not investment advice. Always do your own research before investing. Click here to see full disclaimer.
