A decade after the Brexit referendum, the UK stock market has experienced substantial challenges, reflected in significant outflows from domestic equity funds and a falling share of global stock markets. However, analysts caution against attributing the market’s underperformance solely to Brexit, pointing to broader structural factors that predated the 2016 vote.

Since the referendum, investors have withdrawn approximately £120 billion ($160 billion) from UK equity funds, leading to a decline in London’s representation within the global equity landscape. At the time of the referendum, UK shares accounted for 40 percent of highly equity-focused funds, a figure that has since dropped to 18 percent. Meanwhile, North American shares have climbed from a 30 percent weighting to 50 percent in the same category. The UK’s weighting in global equity benchmarks has receded from 10 percent twenty years ago to just 4 percent today. This shift reflects a marked change in investor behavior, with asset managers increasingly favoring international equities over UK-focused funds. Over the past decade, 380 UK equity funds have closed, while only 200 new ones have launched.

In terms of returns, a hypothetical £100 investment in the FTSE 100 at the time of the referendum would be worth around £164 today, considerably less than the £354 that same sum would yield if invested in the S&P 500. The FTSE 250, which has a greater domestic exposure, would have delivered a lower return, turning £100 into roughly £135. When dividends are reinvested, the FTSE 100’s total return improves to about £239, still behind the US benchmark’s £419 but ahead of the FTSE 250’s £178.

Experts emphasize that the structural composition of UK equities played a key role in shaping these returns. The UK market’s focus on sectors such as energy, financials, and materials has made it less aligned with investor demand for growth areas like technology, communication services, and online retail, which have driven much of the US market’s gains. Between 2010 and 2025, technology stocks alone contributed half of the S&P 500’s total return but only 2 percent in the UK market. The UK’s equity returns have relied more heavily on dividend income, while US returns have been propelled largely by valuation gains.

More recent performance provides a somewhat different perspective. Over the past five years, the FTSE 100’s total return with dividends reinvested is closer to that of the S&P 500—£177 versus £190 per £100 invested. This convergence reflects a rotation from growth to value stocks, a development driven by rising interest rates, which have increased the appeal of UK companies characterized by strong cash flows and high dividend yields. The UK’s exposure to natural resources and energy sectors, which have benefited from higher commodity prices, as well as banking stocks supported by rising interest rates, have also underpinned this performance. Additionally, UK shares now trade at significant discounts, approximately one-third cheaper than their US counterparts, a gap that has narrowed from nearly 50 percent but remains sizeable.

The persistence of takeover activity in the UK market suggests that corporate buyers are willing to pay premiums where public market valuations appear undervalued. Looking ahead, investors may increasingly favor UK equities for capital preservation and income as volatility in technology stocks and shifts in monetary policy weigh on growth-oriented markets. Some market observers note that political stability following upcoming changes in UK leadership could further enhance the attractiveness of British shares.

While Brexit has been a factor influencing investor sentiment, the broader trends in market structure, sector composition, and global investment preferences have been significant drivers of the UK stock market’s trajectory over the last decade.