Despite political turbulence, the FTSE100 has achieved record highs in the past year. Here’s why it has remained so resilient
The UK stock market has remained resilient during the past year, despite political turbulence domestically and overseas, with experts hailing it as a “brilliant” time to invest in UK shares.
The FTSE100 – the UK’s best known stock market index – has reached record highs on multiple occasions in 2025, breaking through 9,000 points, and outperformed many of the other world markets.
It comes at the same time the Chancellor is encouraging the public to invest in UK stocks and shares, with the aims of boosting the economy – although threats to cut the cash ISA allowance in order to accommodate this have not been universally welcomed.
Rachel Reeves has said the “negative” attitude towards investing money must change and has pledged to offer support to encourage would-be investors.
Many of those who have already chosen to invest in UK funds will find they have made large returns on their money.
So why is the UK stock market booming while others suffer? And what do first time investors need to be aware of? We spoke to experts to find out.
How well is the FTSE100 doing?
Dan Coatsworth, investment analyst at AJ Bell, said: “It’s been a wonderful time to invest in UK shares. The FTSE100 recently went through the 9,300 [points] level for the first time and has hit a new record high on multiple occasions this year [though it has fallen back slightly in the past week].
“Year-to-date, investors would have made a 17.1 per cent total return including dividends from a FTSE 100 tracker fund, excluding charges. That’s an attractive return and we’re only a little over halfway through the year.”
While the UK has performed well, it is worth noting that some European equity indices have done even better, with similar themes driving performance, particularly strength in industrials, defence, and financials.
What has contributed to the boom?
There are various reasons for the resilience of the FTSE100, including a renewed appetite for UK defence stocks since governments across Europe pledged to increase their military spending in March.
Jonathan Raymond, investment manager at Quilter Cheviot, said: “The UK stock market has quietly delivered a solid performance this year, supported by a combination of sector-specific strengths, attractive valuations, and renewed interest from international investors.
“The outperformance can be attributed to three key factors: cheap valuations that have encouraged foreign investment, a rise in defence spending that has boosted select companies, and a more balanced and defensive sector mix that has helped navigate a volatile backdrop.”
He flagged that a key driver has been the relatively large exposure to defence and industrial stocks, such as BAE Systems and Rolls-Royce, which have benefited from a broad increase in defence spending across Europe.
Investors are also keen to move away from the US stock market following Donald Trump’s controversial introduction of global tariffs.
Alex Wright, fund manager at Fidelity Special Situations, said: “If we rewind back to the end of last year, the market consensus overwhelmingly expected US dominance to persist, yet the exact opposite has occurred.”
Mr Coatsworth added: “The FTSE 100 is full of the type of stocks that appeal to investors when there is uncertainty in the world. Investors seek companies with defensive qualities and the UK market has them in spades.
“Industries including tobacco, utilities and telecoms typically have steady earnings. They provide services which consumers and businesses need, and certain companies fall under the category of non-discretionary spending. We all have to pay energy and phone bills every month.”
What people invest in
For those who are keen to get started investing – or are looking to move their money – it can be difficult to know where to turn.
People typically invest in shares or funds. Shares are when you buy a stake in a company which are traded throughout the day on the stock exchange.
Meanwhile, funds – which are a collective investment – means your money is invested with other peoples. This is used to buy a mix of different assets.
Some may look to invest in ETFs – ‘exchange traded funds’ – which are a collective investment fund that’s traded on a stock exchange, in a similar way to an individual company’s shares.
If an investor bought shares of a FTSE 100 ETF, they would own shares of the fund, but would not have had to buy shares in all 100 companies that make up the FTSE.
Other options are bonds and gilts – which are a way for companies or governments to raise money which is done by borrowing money from investors. When you invest in these, you’re lending money to a company or government which in return provides a fixed rate of interest.
They have lower risk, but also a lower growth potential.
Meanwhile, an investment trust is a company that raises money through selling shares to investors and then pool the money to purchase and sell a range of investments.
Jemma Slingo, investment and pensions specialist, Fidelity International, said: “For first-time investors, the key is to start with a diversified fund, keep costs low where possible, and take a long-term view. The FTSE 100’s resilience this year shows that even in uncertain times, diversification across sectors and geographies can pay off.”
What first-time investors need to watch out for
There are certain things to watch out for if you are a first time investor.
One is looking out for fees. The main two ways to invest – whether via a stocks and shares ISA or a more general investment account – are via a managed fund, or a DIY account.
With a managed fund you will pay someone to manage your money, and where it is invested, for you. With a DIY account, you will pick the individual investments or choose from several pre-made ‘funds’, which contain a selection box of investments.
Whichever you choose though, experts say you need to pay attention to the fees you will be charged. These fees can be for individual trades – buying and selling investments – having an account, or for the management of your funds.
Another is to spread out your investments. This can help protect against market volatility.
Alan Barral, financial planner at Quilter Cheviot, said: “Too many DIY investors stick with a few familiar shares, but that creates unnecessary risk. A well-diversified portfolio spreads exposure across different companies and sectors and helps reduce the impact of any single investment going wrong.”
A common mistake first-time investors also make is chasing stocks that have done well before.
Mr Raymond said: “For first-time investors, the core message remains unchanged. It is important to focus on building a globally diversified portfolio across sectors and regions, and to avoid overconcentration in any single area.”
