It has definitely been a wild March for the FTSE 100 index. Not too long ago, it tanked by greater than 10%, reaching a low of 9,677 on Monday morning (23 March). For context, it was near 11,000 in late February.
Nevertheless, since Monday’s low, the index has began recovering. As I kind (25 March), it’s as much as 10,077.
So, is the FTSE 100 again on observe? Let’s talk about.
What’s the most recent?
Clearly the occasion that triggered all of the inventory market uncertainty is the Iran struggle. Or, extra particularly, the dearth of delivery going by means of the Strait of Hormuz.
The longer this goes on, the more severe inflation will likely be resulting from disrupted oil, gasoline, and fertiliser provides. The present vitality disaster is probably the worst in a long time.
Analysis from Vanguard earlier this month reveals the financial injury that may very well be attributable to a protracted battle. Europe (together with the UK) and Japan are notably susceptible to excessive oil costs.
As we’re all conscious, issues change hour by hour with President Trump’s insurance policies. The newest is that Iran has — unsurprisingly — rejected a 15-point plan from Washington to finish the battle.
For sure then, it’s too early to inform whether or not the FTSE 100 is again on observe. We don’t but know the inflationary injury to the UK financial system or whether or not the US and Iran are even speaking to at least one one other.
Both means, rates of interest are probably going up in 2026. So traders most likely aren’t going to be within the temper for higher-risk property.
However that may profit the FTSE 100 to a point, because it’s low-cost and lots of constituents pay beneficiant dividends (the index yield has climbed to three.2%).
Some is likely to be completely glad to purchase low-cost FTSE 100 blue chips, accumulate any dividends, and look ahead to a possible snapback rally later this yr. In that case, traders may contemplate one thing just like the Vanguard FTSE 100 UCITS ETF.
Perspective helps
When unpredictable occasions like this develop, I believe it helps to maintain some perspective as a long-term investor.
For instance, have a look at this chart under from Scottish American Funding Firm (LSE:SAIN), or ‘SAINTS’. It reveals how the FTSE 250 funding belief has pumped out inflation-busting dividends for a lot of a long time.
There have been a number of oil crises, recessions, and inventory market crashes over this era. And a few very scary geopolitical occasions. But many of the shares SAINTS invested in proved resilient sufficient to pay rising dividends.
And the inventory market went up and to the proper over time.
However is SAINTS price contemplating at present? I reckon it is likely to be for traders on the lookout for a gentle dividend-paying belief that goals to develop revenue above inflation. Yielding 3.25%, it has elevated the payout for 52 consecutive years.
High holdings embrace Taiwan Semiconductor Manufacturing, Apple, Microsoft, and Procter & Gamble.
That mentioned, efficiency has been disappointing these days, with SAINTS’ ‘high quality’ investing model out of favour. Final yr, the share value returned simply 6.8% versus the FTSE All‑World Index‘s complete return of 14.7%.
If efficiency doesn’t decide up, extra traders may dump the shares, widening the present 8.2% low cost to internet asset worth.
On stability, nonetheless, I believe the potential rewards outweigh the dangers. Final yr, shareholders loved a 7% enhance within the dividend, twice the speed of inflation.
