Remember the Brexit referendum in June 2016? Imagine if you had a time machine and could go back five years to 31 March 2016. Which would have been the best shares to buy from the FTSE 100 three months before the vote? Find out below…
The Brexit vote was disruptive
I live in the south east, but I’m originally from the north east. As the Brexit vote approached, pundits claimed that Remain would win easily. With my roots in the north, I wasn’t so sure. I could see large swathes of the UK voting to leave the European Union. Hence, my wife and I would discuss what could be the best shares to buy in case of a Leave win. Eventually, we decided that it would be wise to invest our wealth outside of the UK in the event of a Leave majority.
After the Brexit referendum on 23 June 2016, it was soon clear that Leave was gaining ground. The final result was a close call: Leave 51.9% and Remain 48.1%. Though the result was close to 50/50, the government agreed to honour the result and begin the Brexit process. At this point, I forgot about the best shares to buy and starting worrying about the future of the Union.
The FTSE 100 five years on
On 31 March 2016, the FTSE 100 index closed at 6,174.90 points. As I write, it stands at 6,726.78. Thus, the UK’s main market index has gained roughly 550 points in five years. That’s an uplift of 8.9% in half a decade, or under 1.8% a year. Add in dividends of, say, 4% a year and this figure more than triples. But it’s still a pretty pitiful five-year return from the FTSE 100. Of course, few Footsie members rose exactly in line with the wider index. Some fell, some crashed, and the best shares to buy doubled, tripled or more than quadrupled your money. Let’s find out which they were.
The five best shares to buy five years ago
If I had a time machine today (or a crystal ball in March 2016), then these would have been the five best shares to buy in the FTSE 100 index and own for five years:
Ocado Group (online grocer) 589.1%
Evraz (steelmaker and miner) 539.2%
Anglo American (global miner) 435.7%
Ashtead Group (industrial equipment rental) 396.4%
Scottish Mortgage Investment Trust (tech fund) 318.1%
For the record, of the 97 shares in the FTSE 100 for the full five years, 25 would have doubled your money or more. Not bad. Then again, 30 of the 97 Footsie stocks would have actually lost you money (and one crashed by 65.6%). But these five superstar shares listed above — the best shares to buy — would have at least quadrupled your investment over five years. The biggest winner, Ocado, would have turned £1,000 into over £6,589 since March 2016. Nice.
Is there any obvious theme to these five star shares? Not really, other than two (Evraz and Anglo American) are mining stocks. But I suspect the mostly widely held share today of the five is SMT, a high-flying tech investment trust. Alas, this stock has already tumbled by a fifth since peaking in mid-February. Would I have bought any of these winners five years ago? Sadly not. Instead, my wife and I shifted our family wealth into US and global equities that have doubled our money and more. Thus, we’re more than happy with our decision to ‘exit after Brexit’!