FTSE 100 breaks 9,000: which funds have led the rally?

The flagship UK blue-chip stock market index crossed 9,000 points on Tuesday, after jumping about 1.6% over the past five trading days (to 15 July).

This year, the FTSE 100 bottomed out at 7,679 on the 9 April, following “Liberation Day” tariff announcements from Donald Trump that shocked global stock and bond markets. Market sentiment reversed when Trump announced a 90-day pause on tariffs.

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The gain for the FTSE 100 from its lows is about 17%, but including the impact of reinvested dividends, the largest UK stocks have delivered a return of just over 18%. So far this calendar year, the total return is an impressive 11%. This compares with a gain of 1.5% for the MSCI World index and a -1.5% loss for the S&P 500, as measured in pound sterling terms.

But was it better to own an index fund or an active fund as the UK stock market recovered?

Index funds charge a very low fee to track a stock market index, such as the FTSE 100. Products from BlackRock, such as the iShares Core FTSE 100 ETF GBP Dist (LSE:ISF), and Vanguard, such as the Vanguard FTSE 100 UCITS ETF (LSE:VUKE), cost just 0.07% and 0.09% annually. This means that their returns closely mirror the returns of the index.

Looking at data from FE Analytics, these exchange-traded funds (ETFs) are up 18.4% each since 9 April 2025 (to close of trading on 14 July). Fidelity Index UK, which tracks the FTSE All-Share index of the largest 650 stocks for a 0.06% fee, is up 18.6%. 

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However, active funds have done even better. The Investment Association (IA) groups open-ended funds into categories and produces an average return figure. The sectors contain active funds, index funds and ETFs, but most are active funds.

Since 9 April, all UK sectors are ahead of the key benchmarks that index funds track, which shows that many active funds have fared well over this period.

Topping the charts is the UK Smaller Companies sector, where the average fund returned 21.3%. Second is the UK Equity Income sector with an average return of 18.88%. Finally, UK All Companies Sector funds returned on average 18.67%.

Of the 332 funds across these sectors, 168 (50%) beat the 18.5% return for the UK market. Those that underperformed will contain active funds, but also index funds and ETFs. 

When looking at the biggest winners, we found 22 funds that had returned more than 25% since the market bottomed this year, with three bouncing more than 30%.

The top performers were SVS Zues Dynamic Opportunities Retail (37.69% gain since 9 April); abrdn UK Value Equity (35.85% gain) and IFSL Marlborough Multi-Cap Growth (32.03%)

Top 10 UK funds since 9 April

Source: FE Analytics, 9 April to 15 July total return. Past performance is not a guide to future performance.

Can UK funds keep up performance?

There’s growing demand for UK shares from international investors, albeit from a low base, which should support higher share prices. Bank of America’s survey of fund managers in June found that the amount of investors who are net underweight UK shares is shrinking.

Moreover, fund data firm Calastone found that in May “UK-focused funds saw reduced outflows – down to half the average over the last three years”.

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Another driver of strong UK returns recently has been investors looking for better value shares in the face of rising economic and geopolitical uncertainty.

The UK market trades on a price-to-earnings ratio of about 17 times, according to London Stock Exchange Group data, which is lower than the 27.3 times for the S&P 500.

Paying less for a company (such as relative to earnings or a company’s assets) can give an investor a better “margin of safety” - as a lot of the bad news for a stock is already in the price, as opposed to expensive shares where expectations are extremely high.

Alec Cutler, manager of the Orbis OEIC Global Balanced fund, explains: “The key investment decision for us is to not buy expensive things and look for things that are selling well below their value. Good things could happen, bad things can happen. But invest in things that don’t have the expectations for things to continue to be good.”

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The UK market is also “reasonably insulated” from Donald Trump’s trade wars, according to value investor Alex Wright, who manages Fidelity Special Values Ord (LSE:FSV) investment trust, which is one of our Super 60 investment ideas.

This means that the market is less likely to drop due to political changes in the US.

Wright says: “We’re not a big exporter. We don’t have a big trade surplus with the US unlike the European Union or China.

“Also, if you look at the make-up of the UK market, it doesn’t have exposure to the type of companies which are badly affected by tariffs.”

By this, he means that British companies are generally not advanced manufacturing or technology companies, such as Apple Inc (NASDAQ:AAPL) or automakers, which have complex global supply chains.