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Investors prosper during Queen Elizabeth’s reign

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09/09/2015
The reign of Queen Elizabeth II has been typified by stability and, arguably, propserity. Has her time on the throne also seen investors prosper?

When Queen Victoria acceded to the throne in 1837, the London Stock Exchange was 36 years old. Commodity and then equity trading was a recent innovation, having evolved from coffee houses around the Royal Exchange into more ordered activity. Information was imperfect, and volatility high – a notable crash occurred in 1835, dubbed ‘The Spanish Panic’.

When Queen Elizabeth II acceded to the throne in 1952, the London Stock Exchange was internationally recognised and substantially more formalised.

Nonetheless, trading was conducted face-to-face and settlement was done once a week. The main index was the FTSE 30 (begun 1935). The composition of the market in 1952 was largely major industrial companies, three of which remain on the main index today – GKN, Rolls Royce and Imperial Tobacco.

The FTSE 30 was replaced by the FTSE 100 in January 1984, the new index rising from 1,000 upon opening to just over 6,000 today, reaching an all-time high of over 7,000 earlier this year. The FTSE All Share index has risen from 200 points in January 1973 to around 3,300 points today – a capital return of roughly 7 per cent per annum, with dividends yielding an average return of 3 per cent per annum.

The landscape of the market has changed much during Her Majesty’s reign. Today, the composition is more international, trading is now electronic and settlement takes place daily on trade date plus two days. Funds, or collective investments, have become a popular way of accessing the market and spreading risk. Share ownership among UK consumers is high, boosted through large-scale privatisations and increased ease of access due to the emergence of online brokers.

“During Her Majesty’s reign the stock market has prospered,” says Richard Stone, chief executive of The Share Centre.

“Taking a long view – as one should when investing – the market has delivered close to double digit per annum returns when looking at both capital and income. The last 63 years demonstrate equities can provide good returns if investors can ride through volatility. Hopefully there will be many more years to come with Her Majesty as monarch, and the markets may enjoy more of the stability the Country as a whole has seen during this time.”

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