The FTSE 100 index has been one of the top laggards over the years. It has barely moved in the past 12 months while its global peers like the S&P 500, Nasdaq 100, FTSE MIB, and DAX are hovering near their highest level on record. The footsie has risen by 9% in the past five years while these other indices have surged by double or even triple digits.
FTSE 100 index woes to continueSadly, there is a likelihood that the FTSE 100 index will remain under pressure in the next few years as the UK economy slows. Worse, some of its most prominent companies like BHP and CRH have changed their primary listings while others like Flutter Entertainment are thinking of doing the same. There is a likelihood that more UK companies will decamp to the US, where they will attract better valuations.
Therefore, it is hard to see a catalyst that will propel the FTSE 100 index higher. For one, its biggest companies are slow-growing ones like GSK, Diageo, Glencore, and Rio Tinto. This is in contrast to the US, where the most prominent firms are forward-looking technology companies like Microsoft, Apple, Nvidia, and Broadcom.
It is hard to spot any major technology company in the FTSE 100 index. Those that have a tech angle are firms like Ocado, Sage, and Rightmove. All this explains why the FTSE 100 index trades at a discount compared to its peers. It has a PE ratio of 10 compared to the S&P 500 22.
F&C is a better holding
FTSE 100 index vs F&C Investment Trust
Therefore, against this backdrop, I present F&C Investment Trust (LON: FCIT), an FTSE 100 index constituent that I believe is a better holding than the index itself. Started in 1868, F&C is one of the biggest trusts in the UK with over 5 billion pounds in assets.
There are three reasons why I believe that the F&C share price has more upside than the FTSE 100 index. First, it has a long-proven record of performance and dividend growth. It has hiked its dividend for 52 years, making it a dividend king. There is a likelihood that this trend will continue.
Second, unlike the FTSE 100 index, F&C is more diverse. It holds over 400 companies, including the likes of Microsoft, Alphabet, Amazon, Mastercard, Lowe’s, and Morgan Stanley. Most companies in the fund are American ones followed by European and UK companies. It is a global fund with companies from Japan, Japan, and the emerging market.
Third, F&C Investment Trust share price has a long track record of beating the FTSE 100 index. It has jumped by more than 124% from its lowest point in 2020. Most recently, the fund jumped above the key resistance point at 976p, invalidating the double-top pattern. In most cases, this is usually a bullish sign.
Therefore, people who invest in the F&C Trust hold many and diverse companies than the FTSE 100. Also, unlike other trusts, F&C tends to trade at a premium to its Net Asset Value (NAV). This is a major risk that most UK trusts have.
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