The FTSE 100 index of blue-chip stocks continues to enjoy brilliant momentum in 2026. Not even the Iran war, and the significant consequences it has on inflation and economic growth, can derail its progress.
The question is, how much would someone who invested in a tracker fund a year ago have now? A year ago, the index was at 8,602 points. Fast-forward to today and it’s far higher at 10,273 points.
This means someone who put £20,000 in a tracker 12 months ago would now have £23,886 before dividends. With dividends paid by FTSE 100 shares included, the investment today would be £24,721. That represents a whopping 23.6% total return!
What next?
But can an index tracker continue delivering those sorts of brilliant returns? If you’re an analyst at UBS, the answer may well be ‘yes.’
In recent weeks, the Swiss bank lifted its year-end target for the FTSE. It’s now predicting the index will reach 11,000 by December, up from a prior forecast of 10,500. This reflects higher expected earnings from oil sector giants BP andShell.
But here’s the thing: predicting near-term stock market movements is incredibly tough. And a range of risks could limit gains or even prompt a reversal in the weeks and months ahead. These include:
- Cooling economic growth across the globe.
- Soaring inflation and large interest rate hikes.
- Growing political uncertainty in the UK and overseas.
- Currency swings, and especially a resurgent pound.
- Profit-taking after the FTSE 100’s strong rally.
It’s also worth considering what awaits the BP and Shell share prices. A more robust ceasefire in the Middle East would almost certainly pull these oil shares lower, and with it the wider index. Rising oil supplies and growing renewable energy demand also threaten these FTSE 100 stocks further out.
What should you do?
I still think an index tracker fund demands serious consideration from investors. The Footsie remains packed with bargains, and this could continue to send it higher. I’m also expecting it to keep rising over the long term as corporate earnings steadily grow over time.
But it’s not the path for me. Why? I think investing in individual FTSE 100 shares is the way to go. Take the example of Games Workshop (LSE:GAW), which I hold in my SIPP.
Purchasing specific stocks like this doesn’t give me the protection that a diversified trader fund does. In the case of Games Workshop, its share price could drop if costs soar and sales dip, impacting earnings.
But this doesn’t concern me, as I invest for the long term. And over a period of years, I’m confident the Warhammer maker can continue outperforming the rest of the FTSE. Since 2016, it’s delivered an average annual return of 43.1%. That’s four-to-five times greater than the broader index’s 9.3%.
How am I so confident? Well, the company continues to rapidly expand to capitalise on the fantasy gaming boom. It’s also accelerating licensing of its IP for film, TV, and video games makers to supercharge royalty revenues. In my view, Games Workshop remains one of the FTSE 100’s hottest growth stocks.
