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It’s been a volatile year in stock markets around the world. From tariff scares through to monetary policy shifts, investors have been left trying to dodge market corrections and carefully navigate which stocks to buy and which to avoid. But if an investor had decided to park £10k in a tracker fund of either the FTSE 100 or the US stock market, which one would have paid off better?
A tight result
So far this year, the FTSE 100 is up 17.3%. By comparison, the S&P 500 is up 16.2%. Even though some might be surprised, this means the UK stock market has outperformed its US cousin as we hit December. In terms of the numbers, it would mean an investor would be sitting on an unrealised profit of £1,730 or £1,620, depending on where the funds were allocated.
There are some reasons to note regarding the difference in returns. One factor relates to the positive surprise from the UK’s economic performance. Coming into the year, there were concerns that we could head into a recession. This hasn’t happened, and even though the economy isn’t firing on all cylinders, it hasn’t been a disaster.
The US is home to most major AI and tech companies, which have driven most of the index’s gains in 2025. Apart from those key sectors, there haven’t been many others worth shouting about. Therefore, although the US index has done well, it hasn’t been supported by all areas.
Finally, some investors have actively sought to buy stocks outside the US due to concerns about US trade policy. As a result, I think some of the money flow has gone out of the S&P 500 and into the FTSE 100.
Looking at 2026
Next year, I think the FTSE 100 could continue to do well. However, instead of buying an index tracker, I think individual stocks could do even better. For example, someone could consider Next (LSE:NXT). The UK retailer has seen its share price jump 43% in the last year.
Financial performance has been a key driver in the move. Back in March, annual results showed a pre-tax profit of over £1bn, the first time it passed that milestone. Fast forward to October, and it raised its full-year profit guidance again, showing that over the course of 2025, things have progressed even further.
Online sales are driving this growth, as is international expansion. This is why I think it can do well next year. Even though the outlook for the UK high street is still challenging, Next is becoming more and more diversified. This is happening both geographically and across different channels (online, store, third-party brands).
While many UK retailers have struggled due to weak consumer confidence and cost pressures, Next has managed to grow. This is a green flag for next year, showing resilience in a challenging retail environment.
One risk is that competition in this space is always high, meaning every season is key to staying ahead and avoiding a minefield of fashion missteps. Any errors here could restrict the further pace of growth.
Even with this concern, I think Next is a stock to consider buying as part of a continued outperformance of the UK versus the US.
