On the 24 February the index closed at 6,949.63, above its previous high of 6,930.20.  However, after trading above 7,000, the market has subsequently retraced and on the 11 June was trading 1.2 per cent below its 30 December 1999 high.

Most press in the public domain focuses on the FTSE 100.  Representing over 80 per cent of the FTSE All Share in terms of market capitalisation, the companies of the FTSE 100 clearly represent a significant weighting.  The headline figure always referred to however represents capital movement only.  This of course excludes one of the main components of historic equity returns, dividends.

The total return from the FTSE 100 over the same period of 30 December 1999 to 11 June 2015 was 67.88 per cent, significantly higher.  This highlights the importance that the compounded return from dividends can make, 3.46 per cent annualised over the period.

Now over this period we accept that the FTSE 100 has changed, constituent companies having been promoted and relegated.  However, there are other areas of the UK market, which have offered much higher returns.  For example, the FTSE 250 over the same period has produced a total return, i.e. including dividends reinvested, of over 331 per cent, dwarfing that of the FTSE 100, helping lift the return of the FTSE All Share to over 92 per cent.

A further option is to invest with an active fund manager, who will base their stock selection on the outlook for individual stocks rather than simply their market cap weighting within an index.  There are 120 funds in the IA UK All Companies sector which have been in existence over this period.  The average return from these funds over this period is 94.66 per cent, ahead of the FTSE 100 and FTSE All Share.  There is a significant range of returns achieved by individual funds, ranging from the highest at 449.83 per cent to the lowest at 9.29 per cent.

 Source: FE Analytics, Bid-Bid, Total Return

The table above shows the performance of the top ten funds over the period.  Three of the managers, being Paul Mumford at Cavendish Opportunities, Andrew Green at GAM UK Diversified and Andrew Brough at Schroder UK Mid 250 have been in tenure throughout.

Dividing the sector into quartiles, first quartile funds have delivered an average return of 253.87 per cent, second quartile funds 125.74 per cent, third quartile funds 83.47 per cent and fourth quartile funds 48.22 per cent.  The 92.37 per cent total return achieved by the FTSE All Share would place it in the third quartile, 69^th out of 120 funds.

So what can we take away from this?  A flat equity market in terms of capital appreciation does not necessarily mean strong investment returns cannot be made over the longer term.  The compounding effect of dividends is powerful, there is life outside the FTSE 100 and last but not least, good active management can significantly improve the return potential.