Forget AI hype and trillion-dollar valuations. In 2025, the best-performing stocks weren’t Silicon Valley’s finest — they were a handful of decidedly unglamorous British companies. Analysts at Rathbones have coined them the “Fusty 5”: Aviva, NatWest, Marks & Spencer, Centrica, and Imperial Brands. Dull? Absolutely. Profitable? Very much so. While the Magnificent 7 stumbled under the weight of macro headwinds and a cratering dollar, these London-listed stalwarts quietly delivered returns that left their US counterparts in the dust.
What Is the Fusty 5?
The Fusty 5 is a tongue-in-cheek label coined by Alan Dobbie, fund manager at Rathbone Income Fund, to describe five “dull, ex-growth” UK-listed companies that dramatically outperformed expectations in 2025. The name is a deliberate jab at the Magnificent 7 — and the market’s obsession with high-growth tech.
These aren’t companies building the next large language model. They’re a bank, an energy firm, a supermarket, an insurer, and a tobacco giant. What they share: consistent dividends, low valuations relative to US tech, and business models that don’t require you to believe in a sci-fi future to justify the share price.
How Did They Actually Perform?
The numbers speak for themselves:
- NatWest led the pack with a near-70% gain — boosted by the government finally selling off its last post-financial-crisis stake in the lender.
- Aviva and Centrica (owner of British Gas) both posted close to 50% gains.
- Imperial Brands added roughly a third to its valuation.
- M&S was also part of the cohort, rounding out a group defined by consistent dividends and defensible business models.
Meanwhile, across the Atlantic, the Magnificent 7 largely disappointed. Microsoft, Apple, and Tesla all fell in market cap by low single-digit percentages. Meta crept up just 12%. Only Nvidia and Alphabet managed gains above 15% — and Alphabet’s rebound came after a rocky 2024.
Why Did UK Value Stocks Win in 2025?
The macro environment flipped
Risk appetite took a hit. Geopolitical tensions and Donald Trump’s return to the White House spooked investors who’d loaded up on growth-at-any-price stocks. When uncertainty rises, reliable dividend payers start looking very attractive.
“If you’ve doubled down on growth at any price, that has increasingly become an anchor on performance,” said Dobbie. “Markets are once again scrutinising what’s priced in.”
The dollar had a terrible year
The US dollar fell 10.1% against a basket of major currencies in 2025 — its steepest annual decline in three decades. That made dollar-denominated assets, including US equities, less attractive for global investors rotating into alternatives. UK stocks, priced in sterling, benefited.
The FTSE 100 quietly had a banner year
London’s flagship index delivered a total return above 25% — the best performance among major blue-chip indexes globally, beating the Nasdaq, S&P 500, CAC 40, and DAX. The FTSE’s naturally defensive composition — heavy on banks, defence firms, and miners, all of which caught structural tailwinds — did a lot of the heavy lifting.
Is This a Lasting Shift or a One-Year Blip?
That’s the big question. Dobbie thinks it could signal something more structural: “The market narrative has been that quality growth is the only game in town. But in 2025, we saw something very different. That could lead to a profound shift in leadership.”
Value investing has had many false dawns over the past decade. But when the macro backdrop genuinely changes — slower growth, geopolitical risk — businesses that generate steady cash flows and return capital to shareholders through dividends tend to reassert themselves.
“Income investing naturally leans towards value, but value does not mean low quality,” Dobbie added. “We focus on businesses allocating capital sensibly to drive sustainable earnings and dividend growth.”
Whether the Fusty 5 can keep up the momentum into 2026 remains to be seen. But for now, boring is winning.
Key Takeaways
The 2025 market reminded investors that high valuations and AI tailwinds aren’t a one-way ticket to returns. Sometimes, a bank that pays a reliable dividend and a tobacco firm with pricing power quietly outrun the most-hyped names on the planet. If your portfolio is all growth and no value, it might be worth a rethink.
Want to go deeper? Explore how dividend investing stacks up against growth strategies — and whether the FTSE 100’s winning streak has legs.
FAQ
Q1: What is the Fusty 5?
A: The Fusty 5 is a group of five UK-listed companies — Aviva, NatWest, Marks & Spencer, Centrica, and Imperial Brands — identified by Rathbone Income Fund as significantly outperforming the US Magnificent 7 in 2025. The name plays on their reputation as “dull” but dependable stocks.
Q2: How did the Fusty 5 beat the Magnificent 7?
A: A combination of consistent dividends, low valuations, and a macro environment that punished high-growth, high-risk assets worked in their favour. The dollar’s steep decline and rising geopolitical uncertainty also drove investors towards more defensive UK equities.
Q3: Did all of the Magnificent 7 underperform in 2025?
A: Not all. Nvidia and Alphabet posted gains above 15%. But Microsoft, Apple, and Tesla all saw small falls in market cap, and Meta rose only 12% — a far cry from the index-beating returns investors had come to expect.
Q4: Why did the FTSE 100 outperform in 2025?
A: The index’s defensive make-up — weighted towards banks, defence companies, and miners — aligned well with 2025’s macro themes. Combined with a weaker dollar boosting the relative appeal of sterling-denominated assets, the FTSE delivered its best total return since the post-financial-crisis recovery.
Q5: Is UK value investing a long-term opportunity?
A: Analysts like Rathbone’s Alan Dobbie believe the conditions that drove UK value stocks in 2025 — scrutiny of valuations, preference for cash generation, macro uncertainty — could persist. That said, value’s track record over the past decade is mixed, and any shift in sentiment could quickly reverse the trend.
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Effective Date: 15th July 2025
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