The FTSE 100's top stocks

Which FTSE 100 stocks have shown the best performance thus far in 2025, following a year of robust returns for the UK's flagship index?

Use TradingView to track all markets. In 2024, the FTSE 100 had its best year since 2021, yielding a 97 percent return overall. With a strong start to 2025, it returned 8.3 percent in the year ending February 28.

Although few may have anticipated at the beginning of 2024 that FTSE 100 stock market index trackers would rank among the best-performing funds, the index's returns caught many off guard.

Follow every market on TradingView The UK stock market is thought to be having difficulties due to delistings and a lackluster IPO pipeline.

However, according to James McManus, chief investment officer at Nutmeg, a digital wealth manager owned by JP Morgan, "UK investors are prioritizing their home market this year."

According to McManus, "even though the FTSE 100 has had a strong start to 2025, long-term investors in the UK might feel short-changed compared to other markets."

Particularly, the US has produced disproportionate returns in recent years, as has its flagship index, the SandP 500. The S&P 500, however, "is having a challenging start to 2025" despite the FTSE 100's gains.

The US economy, including the much-lauded stock market, has been negatively impacted by Trump's tariff trade war, which has even sparked speculation of a US recession.

Sanjay Raja, senior economist at Deutsche Bank, on the other hand, claims that "there is a budding sense of optimism about the UK." Raja cites a number of reasons for this, including the UK's shift to deregulation, the possibility of a closer trade agreement with the EU, and higher defense spending on the continent, all of which Raja thinks could help FTSE 100 stocks, which control the market.

More importantly, though, Raja anticipates that the UK "will remain in the US's good graces as the trade war begins."

There appears to be some protection for the FTSE 100 from the current tariff regime. Less than 3.3 percent of UK exports to the US and 0.1 percent of UK GDP are made up of steel and aluminum, on which Trump has imposed universal 25 percent import tariffs, according to UK economist Ashley Webb of Capital Economics.

If a trade agreement between the US and the UK is reached, it might provide FTSE 100 stocks with additional support.

What are the largest stocks in the FTSE 100?

The following are the top five FTSE 100 stocks by market capitalization, or market cap.

Source: ShareScope/AJ Bell. Market close date for data is December 6, 2024. total return after reinvested dividends.

The UK government's reduction of its holding stake and indication that it is looking to exit the company entirely benefited Natwest (LON:NWG), the best-performing stock in the FTSE 100 in 2024.

Dan Coatsworth, an investment analyst at AJ Bell, states, "A significant share overhang was removed as the government expedited the sale of what was a substantial stake in the business after a bailout in the global financial crisis." "Compared to 38 percent a year ago, the stake is now less than 11 percent, and the government has stated that it will be eliminated entirely next year.

A number of tailwinds helped Rolls-Royce, the second-best-performing FTSE 100 stock, from higher military spending to the return to normal following the Covid pandemic.

"Rolls-Royce has benefited from a recovery in the aviation industry," Coatsworth says. "Rolls-Royce's earnings on spare parts and repair contracts for a sizable installed base of aircraft engines are directly impacted by the duration of plane flights.

Is the FTSE 100 a good investment option?

Even though their share price increases don't always match the explosive rates of their American counterparts, FTSE 100 shares can close the gap in terms of total returns and be a good source of dividends.

According to Coatsworth, "the FTSE 100 can fundamentally help provide ballast to an ISA or pension portfolio, particularly as the index has a rich source of dividends and a good mix of cyclical and defensive companies."

The S&P 500's decline so far this year also emphasizes how important it is to diversify a portfolio and avoid becoming overly dependent on any one market.

McManus says, "The story of these two economies, the US and the UK, shows the importance of diversifying your investments across the globe."

Holding UK stocks alongside those in the US, emerging markets, Europe, and other regions might be the best strategy to profit from global megatrends, lower your investment risk, and identify new winners.

A tracker fund, like the Vanguard FTSE 100 UCITS ETF (LON:VUKE), is a simple way to invest in the FTSE 100.