Buying shares in a FTSE 100 index fund is a fantastic way to start building wealth. Using this simple strategy, an investor immediately gains exposure to the 100 biggest businesses in Britain, enabling a portfolio to piggyback the success of industry titans.
But how much money have investors actually made with this strategy over the last five years? Let’s find out.
The power of index investing
Since July 2021, the FTSE 100’s climbed 47.4%. But for anyone who’s been reinvesting dividends along the way, that return jumps to a far more impressive 76.6%, vastly outpacing the FTSE 250‘s measly 20.5% over the same period.
That’s a genuinely good result. Annually, it works out to be the equivalent of roughly 12% a year ahead of the typical 8% long-term average. And for investors who simply wanted to park their money and forget about it, the flagship UK index has done its job well.
But while index investors have done nicely, some stock pickers have done extraordinarily better.
Why stock-pickers are laughing
Since the summer of 2021, Airtel Africa (LSE:AAF) shares have delivered a jaw-dropping total return of 391.4%! To put that into monetary terms, a £5,000 initial investment five years ago is now worth £24,570. But how?
The secret behind this extraordinary performance is Airtel’s digital growth story. As smartphones become more accessible and incomes rise across Africa, the telecoms group has happily sold more mobile data packages. It’s also opened its gates for Airtel Money – its fast-growing mobile fintech platform designed for an unbanked population.
And the results speak for themselves. In its 2026 fiscal year (ended in March), revenues rose 29.5% to $6.4bn, underlying EBITDA margins hit an all-time high of 50.3% in the final quarter, and profit after tax more than doubled to $813m. And with dividends also receiving a 9% boost, management seems to be pretty confident about what lies on the horizon.
Having said that, this isn’t a risk-free investment. Airtel’s operations span some of the world’s most politically and economically volatile markets. Currency devaluations in its core markets such as Nigeria can dramatically reduce reported earnings in pounds sterling, even when the underlying business is performing well.
What’s more, there are energy costs to consider. With developing nations hit harder by surging oil & gas prices, management’s explicitly flagged near-term profit margin pressure as a real risk. And it’s something that investors need to monitor carefully moving forward.
Is it still worth considering?
Airtel Africa’s a business operating at the intersection of two of the most powerful long-term growth trends in the world: African mobile adoption and financial inclusion.
So despite the stock’s phenomenal five-year run, I believe the underlying opportunity’s barely been scratched. That’s why I’m already taking a closer look at this business for my own portfolio. And it’s not the only compelling FTSE 100 opportunity I’ve spotted this week…
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Zaven Boyrazian does not hold any positions in the companies mentioned.
