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Because the international monetary disaster of 2007-09 resulted in March 2009, the US inventory market has loved an nearly unstoppable run. In the meantime, as I’ve mentioned repeatedly, the UK’s FTSE 100 index seems to be too low cost and deserves its day within the solar. And guess what’s come to move in current days?
The skyrocketing S&P 500
On 6 March 2009, the S&P 500 index hit 666 factors — the biblical ‘number of the beast’. I bear in mind this milestone clearly, as traders worldwide have been in absolute agony. In any case, the index had peaked at 1,565.15 on 9 October 2007, earlier than collapsing by 57.4% — its greatest drawdown since World Struggle II.
Again then, I used to be thrilled at the potential for shopping for shares at knockdown costs. My household piled our money into US and UK equities that spring, making life-changing returns over the following 16 years. At the moment, the primary US market index stands at 5,534.54 factors, up a staggering 631% from its 2009 low. Wow.
Nonetheless, since early February, I’ve repeatedly warned that US shares had risen too far because the US presidential election of 5 November. It seems I used to be proper, because the S&P 500 and tech-heavy Nasdaq Composite indexes have since misplaced of all their post-election beneficial properties.
From Trump bump to Trump stoop
The S&P 500 is now 10% under its 19 February excessive of 6,147.43, leaving it no greater than it closed on 3 July 2024. In the meantime, the Nasdaq Composite stands at 17,351.59 factors, having dived 14.1% from its report excessive of 16 December 2024.
Now for some shocking information: for the primary time in years, the FTSE 100 is thrashing each of those US counterparts. Over one yr, the Footsie is up 9.8%, versus 7.3% for each the S&P 500 and the Nasdaq Composite.
Moreover, the icing on the cake for UK shareholders is that the FTSE 100’s dividend yield is 3.5% a yr. The yearly money yields for the S&P 500 and Nasdaq Composite are 1.5% and 0.8%, respectively.
Presumably, different traders could also be adopting my stance that UK shares are undervalued, each in historic and geographical phrases. Lastly, a triumph for worth investing!
One low cost FTSE 100 share
As an old-school worth and earnings investor, I’m an enormous cheerleader for affordable FTSE 100 shares. For instance, take Authorized & Common Group (LSE: LGEN), which goals to return round two-fifths of its market worth to shareholders over the following three years.
Since 1836, Authorized & Common has grown to develop into a number one UK asset supervisor. Its three key divisions — asset administration, institutional retirement, and retail — all had a good 2024. Thus, the group raised its dividend by 5% to 21.36p a share. It additionally intends to purchase again one other £500m of its shares, on high of a earlier buyback value £1bn.
That mentioned, managing round £1.1trn of monetary property leaves Authorized & Common closely uncovered to market actions. When share and bond costs dive, its income could be hit onerous, as occurred in Covid-ravaged 2020. Even so, its rock-solid steadiness sheet permits the group’s shares to supply a whopping dividend yield of 8.9% a yr. That is among the many highest on supply from London-listed shares.
Over one yr, the shares are down 1.8%, however over 5 years, they’re up 24.8%. Hardly thrilling numbers, however we intend maintain onto this high-yielding inventory for years!
