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The FTSE 100’s lengthy lagged the mighty S&P 500. Over the previous decade, the US index powered forward, fuelled by surging tech valuations, whereas the UK’s flagship index remained caught underneath the load of sluggish banks and oil giants.
However 2025’s delivered a shock. To date this yr, the Footsie’s returned over 7% — barely forward of the S&P 500’s roughly 6.5%. That’s a dramatic change in comparison with latest years, and an indication that UK blue-chips are lastly holding their very own.
Dig slightly deeper, and it’s clear what’s driving this. A handful of FTSE shares have smashed expectations, outperforming virtually each main US firm.
Mexico-focused silver miner Fresnillo is up greater than 130%, engineering heavyweight Babcock’s surged 116%, and Rolls-Royce continues its astonishing multi-year run, gaining one other 73% in 2025 alone.
Of all firms on the S&P 500, solely Palantir’s within the high three, edging barely forward of Rolls this yr with 84%. In fifth place is NRG Power, up 65% yr thus far.
What’s driving the surge?
A lot of the expansion comes all the way down to particular tailwinds. Treasured metals are hovering amid international uncertainty, fuelling Fresnillo. Defence budgets are booming, propping up Babcock and Rolls. In the meantime, a recovering oil worth and resilient international demand have helped shore up many FTSE stalwarts.
However a few of these strikes could also be getting forward of themselves. Share costs that rocket on hopes alone can simply grow to be ‘progress traps’, the place valuation disconnects from long-term fundamentals. That’s why I desire to maintain a rational outlook when markets go a bit loopy.
Sturdy earnings, affordable valuations and strong steadiness sheets typically matter extra in the long term than short-term worth jumps.
A extra cautious FTSE 100 choose
One inventory that’s performing extra ‘fairly’ proper now could be Beazley (LSE: BEZ). The specialist insurer has quietly delivered reasonable progress this yr, up 8.8% — nothing flashy, however comfortably forward of the index’s historic averages.
Extra importantly, it’s supported by strong working tendencies. Earnings per share are rising at 9.9% yr on yr, with income up 7.8%. That’s feeding right into a wholesome web margin of 18% and a formidable return on fairness (ROE) of 26.3%.
Valuation additionally appears to be like engaging. The shares commerce on a price-to-earnings (P/E) ratio of simply 6.67 and a price-to-book (P/B) a number of of 1.55, suggesting buyers aren’t paying over the chances for this high quality progress.
It’s not an enormous revenue play, however the dividend yield of two.8% is nicely coated by a payout ratio of simply 18.3%. Free money stream is reassuring at £1.26bn, comfortably outstripping its £614m of debt. Plus, the dividend has been raised for 3 years operating.
Dangers to look at
After all, insurance coverage generally is a risky enterprise. Beazley faces publicity to large-catastrophe-linked losses, which may dent income in any given yr. It’s additionally susceptible to pricing cycles in speciality insurance coverage, which may swing from profitable to lean rapidly if competitors intensifies.
However total, I believe it’s the form of strong British enterprise that’s price contemplating for sturdy reliability.
Whereas progress shares fluctuate wildly, it’s these regular compounders — buying and selling on wise valuations — that usually ship one of the best returns over time. When constructing a diversified long-term portfolio, that’s precisely what buyers must be searching for.
