Market performance - American dominance? - 26th January 2026

Market performance. Look at a typical graph of the FTSE 100 against the S&P 500 and there is a clear-cut winner over the last five years. However, drill down and the gap shrinks…

The graph above appears to show a simple story: over the last five years the FTSE 100 rose by 54% while the S&P 500 powered ahead with an increase of 82%, albeit after a wobble in 2022.

While there is nothing factually wrong with the graph, it is not the whole story. For an investor in the UK, there are two other factors to consider:

1. Currency. The S&P 500 is a US dollar-based index and, as was evident in 2025, that can impact on the return received by a Sterling-based investor.  

2. Dividends. Like most indices – the DAX is an exception – the S&P 500 and the FTSE 100 ignore dividends and only consider capital values.

Look back over the last five years and Sterling has been as high as $1.42 and as low as $1.11. However, between the end of 2020 and the end of 2025, the change was from $1.3673 to $1.3475 – giving a currency boost to US returns for a Sterling-based investor of about 1.5%. 

On dividends, the picture is unsurprisingly different. Add back dividends to the S&P 500 and the dollar-based return rises from 82% to 92%, whereas the same exercise for the Footsie moves the dial from 54% to 84%. Today, the yield on the S&P 500 is 1.2% whereas the FTSE 100 offers 3.0%.

Adjust for both dividends and currency, the total Sterling return for the S&P 500 over the five years to the end of 2025 is 95%. That is still 11 percentage points better than the FTSE 100, but it is much smaller than the 28 percentage points suggested by the graph. 

Source: Techlink Professional. This is a news bulletin and is up-to-date as of the date of publishing. Please check the publishing date at the top of the article.