The FTSE 100 has hit a new record high as global inflation and interest rate fears continued to ease globally.

The index of the UK’s largest publicly-listed firms was trading up more than 1% on Friday, helping it to push past its previous peak.

The index has previously hit an intraday high of 7,903.5 points in May 2018. Its all-time high close was 7,877.45.

On Friday, the index had briefly pushed as high as 7,906.58 at the time of writing, and it remained to be seen if it would beat the all-time close.

For International (or expat!) investors simply focusing on the performance of UK shares as reflected in a Sterling based index is not really that helpful. one should also take into account the weakness of sterling against eg the USD over many years.

If the FTSE index  is restated in USD, then the current level is still 9% below the recent high which was in Feb 2022, ahead of the invasion of Ukraine, and (also restated in USD) the index is  an incredible 32% below its level in November 2007.  

To be fair, the FTSE index  does not include dividends. 

So if one looks instead  at the FTSE Total Return, which does include dividends and again stated in USD, then that index is  6% below the level in Feb 2022 and 11% above its level in November 2007.  So an investor simply buying and holding the FTSE in 2007 would be sitting on a pretty measly 11% total return (including dividends received) over the last 15+ years. Again i have stated everything in USD.

None of this makes me anti UK investing (quite the opposite) as I feel there are a number of high quality and undervalued companies within the FTSE. 

 

It is though, a reminder, that as an expat investor one needs to consider currency exposure. I was advised many years ago, when i first worked overseas, to forget about sterling and use the dollar to monitor and measure investment performance. It was good advice and is (i feel) a useful discipline.