Some years ago, a landmark study by Professor Hendrick Bessembinder found a small minority of US shares generated the bulk of long term returns above those generated by short-term Treasury bills. That finding has informed large asset managers like Baillie Gifford and has since influenced many private investors.
A recent study of the UK market reveals the same story. While shares overall have generated higher long-term real returns than UK Treasury bills, all of the outperformance has come from just a handful of stocks.
The study finds that between January 1975 and December 2024, all of the ‘excess wealth’ was created by just 3% of UK stocks. If investors had taken a ‘buy and hold’ (BAH) approach with these stocks, they would have beaten the market and inflation by a huge margin.
Gathering the data
The study’s authors, Jonathan Fletcher and Michael O’Connell, are members of the Department of Accounting & Finance at Strathclyde University. Their study was first published in the Journal of Asset Management in 2025, with a revision in March 2026.
The authors collected 10-year monthly real return data for UK stocks from January 1975 onward, excluding investment trusts. They then compared those returns with the one-month UK Treasury Bill, which they treated as the ‘risk-free’ alternative.
The study looked at two different periods – the first, from January 1975 to October 1986 and the ‘Big Bang’, and the second from 1986 to 2024. Pre ‘Big Bang’, wealth creation was less concentrated and the majority of stocks provided a higher buy and hold real return than short-term bills.
Post ‘Big Bang’, however, there was a marked increase in ‘skew’ between a small handful of stocks and the overall market. Among their other findings, wealth creation was greatest in the post-Brexit and post-Covid periods, and was even more skewed among smaller stocks.
The authors say their findings support using the study as a wealth trading strategy using monthly observations. However, the strategy works best if stocks are equally-weighted in a portfolio rather than market cap-weighted, as in the index.
What’s important to note from the study is the stocks which generated excess returns didn’t beat the market or Treasury bills every month. In fact they tended to beat the market and T-bills less than half the time.
However, when they outperformed they did so by a wide margin, as the tables below demonstrate. The returns weren’t risk-free, though, and the range of returns increased markedly over longer time periods.
Monthly returns using a BAH strategy
| Mean real return (%) | |
| Stocks | 0.98 |
| Market | 0.72 |
| Treasury bills | 0.07 |
On a monthly basis, the real BAH returns of the ‘wealth creators’ beat the market 45.8% of the time. The same stocks beat one-month Treasury bills 45.6% of the time.
Annual returns using a BAH strategy
| Mean real return (%) | |
| Stocks | 11.9 |
| Market | 7.9 |
| Treasury bills | 0.9 |
On an annual basis, the real BAH returns of the ‘wealth creators’ beat the market 44.6% of the time. The same stocks beat one-month Treasury bills 50.1% of the time.
Decade returns using a BAH strategy
| Mean real return (%) | |
| Stocks | 96.0 |
| Market | 66.5 |
| Treasury bills | 7.3 |
On a decade-long basis, the real BAH returns of the ‘wealth creators’ beat the market 36.7% of the time. The same stocks beat one-month Treasury bills 48.7% of the time.
Lifetime returns using a BAH strategy
| Mean real return (%) | |
| Stocks | 620 |
| Market | 284 |
| Treasury bills | 16 |
On a lifetime basis, the real BAH returns of the ‘wealth creators’ beat the market 30.1% of the time. The same stocks beat one-month Treasury bills 44.5% of the time.
Large-cap wealth creators
In total, between January 1975 and December 2024, UK stocks generated an aggregate wealth in excess of £305 billion. However, only a minority of stocks generated positive wealth and just 3% of companies created all the aggregate wealth.
Below we list the 10 large-cap stocks with the greatest wealth creation, in descending order. Where companies were taken over, we have noted the point at which the deals were completed and the shares were de-listed.
| Shell (LON:SHEL) |
| BP (LON:BP.) |
| HSBC (LON:HSBA) |
| British American Tobacco (LON:BATS) |
| AstraZeneca (LON:AZN) |
| Rio Tinto (LON:RIO) |
| GlaxoSmithKline (LON:GSK) |
| SmithKline Beecham (acquired December 2000) |
| Unilever (LON:ULVR) |
| SABMiller (acquired October 2016) |
If we focus just on the post-Big Bang period, where wealth creation was more concentrated, we get a slightly different picture. The 10 stocks with the greatest wealth creation, in desecending order, were:
| HSBC |
| Shell |
| AstraZeneca |
| British American Tobacco |
| Rio Tinto |
| BP |
| SABMiller |
| BHP Billiton (LON:BHP) |
| Diageo (DGE) |
| Unilever |
Small-cap and AIM wealth creators
The authors also collected the real return data for smaller UK stocks and AIM stocks. The sample period for small stocks is between December 1991 and December 2024, and for AIM stocks between June 1995 and December 2024.
Wealth generation was even more concentrated in smaller stocks, with just 35% generating real positive BAH returns. As with large caps, just 3% of small-cap stocks accounted for all the real wealth creation.
Small-cap stocks ranked by wealth creation, in decending order, were:
| Homeserve (acquired January 2023) |
| Plus500 (LON:PLUS) |
| Hutchison China Meditech (LON:HCM) |
| Ferrexpo (LON:FXPO) |
| Psion (acquired October 2012) |
| Croda (LON:CRDA) |
| Cairn Energy (LON:CNE) |
| Sibir Energy (acquired June 2009) |
| Playtech (LON:PTEC) |
| Greggs (LON:GRG) |
AIM-listed stocks ranked by wealth creation, in descending order, were:
| First Quantum Minerals (de-listed May 2016) |
| Western Coal (acquired April 2011) |
| Plus500 |
| Abcam (acquired December 2023) |
| New Europe Property (acquired July 2017) |
| Dart Group (LON:JET2) |
| Songbird Estates (acquired April 2015) |
| Izodia (liquidated November 2012) |
| Yamana Gold (acquired March 2023) |
| ASOS (LON:ASC) |
Source: ‘Exploring the real wealth creation in U.K. stocks’, Jonathan Fletcher, Michael O’Connell, Journal of Asset Management
