FTSE's new high: A divergence between headlines and reality

The fact that the FTSE 100 finally eclipsed its previous closing high from December 1999 made for interesting headlines recently, but this does not tell the whole story, according to Franklin Templeton's Ben Russon.

A more accurate gauge of UK equity market performance can be taken from the FTSE All Share Total Return index, incorporating more stocks but crucially also dividend payments. On this basis the 1999 market high was actually reclaimed back in 2005.   Even the FTSE 100 alone has returned circa 70% since its 1999 peak, illustrating both the relevance of dividends to investment returns, and the frequent divergence between the headlines and the reality. Such equity market rallies inevitably involve a degree of re-rating, with investors required to apply ever higher valuation multiples to th...