FTSE 100 vs S&P 500: 20 Years of Returns, Honestly Compared

The dominant narrative in investing media is that US equities outperform everything else. Over the last decade, they have. But two decades tell a more interesting story — one that value investors should understand before writing off UK equities as a permanent laggard.

The Raw Numbers: 2004-2024

S&P 500 total return (USD): approximately 660%. FTSE 100 total return (GBP): approximately 285%. In the same currency, the gap is real and significant. US large-cap technology drove roughly 40% of the S&P 500's total return in this period. Remove FAANG+M and the S&P 500 looks closer to 380% — still ahead, but meaningfully less dramatic.

What the Comparison Obscures

Currency effects are enormous. A UK investor who bought S&P 500 in 2004 paid at GBP/USD of ~1.83. By 2024, GBP/USD was ~1.27. That 30% sterling depreciation added approximately 18 percentage points of return in GBP terms — not because US companies were better, but because the pound got weaker. Strip out currency effects and the gap closes further.

Sector composition is also critical. The FTSE 100 is heavily weighted to banks, oil majors, miners, and consumer staples — sectors that underperformed growth tech. The S&P 500 has a structural tech overweight that the FTSE lacks. This isn't a story about US companies being generically better — it's about tech outperforming everything else for 15 years.

Where the FTSE Has Won

Dividend yield: FTSE 100 historically yields 3.5-4.5% vs S&P 500's 1.5-2%. For income investors, the income component of FTSE 100 total return has historically been significantly higher. Valuations: P/E on the FTSE 100 is persistently lower than the S&P 500 (typically 12-15x vs 18-22x). This discount creates better starting valuations for long-term value investors. If mean reversion occurs, UK equities could materially outperform over the next decade.

The Value Investor's Conclusion

US equities have outperformed, but the conditions that drove that outperformance (near-zero rates, multiple expansion, tech dominance) may not repeat in the same way. UK equities offer higher yields, lower starting valuations, and significant sector diversification away from expensive growth technology. For a long-term value investor, a blend of both — UK for yield and value, US for quality growth — is more defensible than the all-in-US approach current consensus implies.

Return figures are approximate and for illustration. Historical performance does not predict future returns. This article is for educational purposes and does not constitute investment advice.