The FTSE 100 is popular with small, private investors for multiple reasons.
For starters, the 100 biggest British companies by market capitalisation have not got to that position by accident.
Yes, there is not necessarily a correlation between business success and market cap (especially in the short- to medium-term). And yes, some companies that have grown big are now in decline.
But as a general rule, the FTSE 100 offers exposure to large, proven businesses.
The ease of getting such exposure is another reason the FTSE 100 is popular with investors. Rather than amassing a portfolio of individual shares, they can simply buy into a fund that tracks the index.
As there are so many tracker funds on the market, there can be some very competitive pricing deals on them compared to some other funds or unit trusts.
The Footsie’s been on a tear!
So far, 2026 has been a good time to be invested in the FTSE 100 index. The index has hit a new all-time high this year, though it is now lower than it was back then.
What about the past 12 months?
The FTSE 100 is up 17% during that period.
That substantially beats the 7% gain delivered by its little brother, the FTSE 250, during that timeframe. It is not far off the 19% gain achieved Stateside by the S&P 500.
Given that gain, £10k invested in the FTSE 100 a year ago ought now to be worth around £11,700.
Not only that, but the investor of a year ago would now be yielding around 3.5% versus the 3% on offer today.
That means that a £10k investment back then should be throwing off around £350 a year of dividends – almost £7 per week on average of passive income.
I’ve been missing out… or have I?
I am not invested in an index tracker. Instead, I have been getting my exposure to FTSE 100 businesses by buying individual shares.
Why? I think that offers me an opportunity to buy into what I believe is the best of the FTSE 100, not the wider index warts and all.
For example, one FTSE 100 share I think investors should consider is insurer Aviva (LSE: AV).
Over one year, the Aviva share price is up 5%. Even taking its juicy 5.8% dividend yield into account, that means that it has significantly underperformed the index over the past 12 months.
I am a long-term investor, though. Stepping back to a five-year timeframe, Aviva shares are up 77%.
That is well ahead of the 50% gain seen in the index over that period. On top of that, Aviva’s dividend yield is much richer.
Its acquisition of Direct Line has given Aviva yet more clout in the UK general insurance market, where it is the leader.
But that has also added some risks, like a concentration risk: Aviva is far more dependent on the UK that it was a few years ago. Any pricing war by smaller competitors keen to undercut its strong position could be damaging for Aviva’s profits.
However, I like the relatively predictable nature of general insurance as a business area. Aviva has long experience and deep expertise not only in underwriting but also in selling insurance.
It has proven its strong cash generation potential, helping to support dividend growth in recent years.
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Christopher Ruane does not hold any positions in the companies mentioned.
