Why the FTSE 100 is smashing the FTSE 250 right now

After a very wobbly April, global markets have mostly bounced back – and the UK’s no exception. But zoom in a bit and you’ll see that not all parts of the UK market are keeping up.

The FTSE 100 – which includes the biggest UK-listed companies – has been on a bit of a roll. Meanwhile, the FTSE 250, which is packed with mid-sized UK companies, has been dragging its feet.

So what’s going on?

First things first – what even are the FTSE 100 and 250?

The FTSE 100 is basically a list of the UK’s 100 biggest companies – the household names, the global giants, the big dogs of the stock market.

The FTSE 250 is the next 250 companies below that – still big and important, but more focused on the UK economy and often less well-known outside the UK.

So how are they both doing in 2025?

So far this year, the FTSE 100 has climbed by just over 5%. The FTSE 250? Not quite so good news – it’s only up around 0.4%.

And it’s not just a 2025 thing. Over the past five years, the FTSE 100 has returned around 75% (share price gains/losses and dividends), while the FTSE 250 has returned 50%. A solid performance from both – but the bigger companies are clearly out in front.

Why’s the FTSE 100 doing better?

For starters, it’s full of big global companies that do business all over the world – so they’re not just relying on the UK economy to grow. In fact, around 80% of FTSE 100 company sales come from outside the UK.

It also includes sectors that have been doing well recently – like banks, which have benefitted from higher interest rates, and companies in healthcare, energy and consumer goods, which tend to hold up well when things feel uncertain.

And when investors start looking for safer, more reliable places to put their money (especially after rocky periods like earlier this year), those kinds of big, stable companies are often where they turn first.

So why’s the FTSE 250 been a bit… meh?

The FTSE 250 is more tied to what’s going on here in the UK. Around half of its companies make most of their money in the UK, and some of the more consumer-focused ones – like retailers and leisure groups – have had a tougher time this year.

There’s also a big chunk of financial companies in the FTSE 250 – like fund managers and insurers – and they haven’t had the same kind of boost that the big banks in the FTSE 100 have enjoyed.

So even though there are some real bargains in the FTSE 250 right now, it just hasn’t been the centre of investor attention lately.

What about dividends?

Here’s something a bit surprising: right now, the FTSE 250 is actually offering a higher dividend yield than the FTSE 100 – 4.1% versus 3.3%.

That means, on average, you could get a slightly higher income from investing in FTSE 250 companies. But dividends aren’t the only way companies return money to shareholders – and lots of firms, especially bigger ones, also do buybacks or reinvest for growth instead.

Final thoughts

The FTSE 100 is winning the race this year, and it’s been leading for the past five. But that doesn’t mean the FTSE 250 is down and out – it’s had strong long-term returns in the past, and when the UK economy picks up again, it could well bounce back.

That’s why lots of investors choose to spread their money across both – so they’re covered whether the big players are shining, or it’s time for the mid-caps to take the spotlight.

🔔 Always remember, the value of your investments can go down as well as up. Dodl doesn’t give financial advice, but we do hope the info is helpful! Past performance is not an indicator of future performance.