35 years of the FTSE 100 – who are the 30 survivors?

•        The FTSE 100 was created in January 1984
•        Only 30 of the original FTSE 100 remain intact today
•        £100 invested in each of those 30 stocks would be worth £165,000 today
•        The best performer turned £100 into more than £33,000

Russ Mould, investment director at AJ Bell, comments:

“Shrewd investors who had put £100 into each of the surviving FTSE 100 companies back in 1984 would today be sitting on a pot of £164,977, assuming income had been reinvested. But not all the companies were stellar picks.

“RBS was a classic example of why firms and management teams who focus on ‘growth’ should generally be avoided like the plague – especially if they acquire regularly. Growth is not a strategy, it is what results from strategy.

“As for the stand-out performers, a lot of them are dividend growth stalwarts – firms that had long spells of consecutives increases in their annual dividend. ABF, Johnson Matthey, Legal & General and Whitbread have all managed it for at least the past 10 years and Tesco, Pearson, Sainsbury and Unilever have all had good runs in their history too. 

“This shows how stock markets are get-rich-slow mechanisms when used properly and when they work well. They are not fruit machines. If you are picking individual stocks, focus on their competitive position, financial strength, management acumen and strategy. 

“Dividend reinvestment is incredibly powerful because of compounding and how the maths of this builds up your savings pot over time. This means firms with fat yields can help – but be careful of stocks where supporting the fat dividend becomes a financial millstone for the company. There are few worse investments than an income stock where the dividend is cut, as the share price usually falls, adding capital pain to income insult.”

Investment trends

“You can see clear trends within the FTSE 100’s history as certain industries, sectors or types of stocks have (for a while at least) captured investors’ imaginations – even if the financial outcomes have not always been good.

“Between 1998 and 2000, a technology, media or telecoms (TMT) stock was promoted to the index 25 times, while between 2000 and 2002, some 22 tech stocks then sluiced straight out of the index as the bubble burst. The index now gets just 1% of its market cap from technology – the wounds of the losses suffered still run deep and the memories have not gone away.

“The next bull-run, in 2003-07, was led partly by financials and the recovery after the crisis was spearheaded by oils and miners as investors latched on to China’s growth potential, a boom in industrial and precious metals prices and oil’s recovery from its post-crisis crash. Twenty oil, mining and oil services names shot into the FTSE 100 between 2007 and 2012 but 16 slid back out between 2012 and 2016.”