Trendy US Magnificent Seven stocks were outperformed by a selection of so-called ‘fusty’ British shares in 2025, analysis shows.
A handful of British stocks, including Aviva and Marks & Spencer, performed better than the likes of Meta and Tesla last year, experts at the Rathbone Income Fund said.
The Magnificent Seven includes Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. Together, the businesses have been operating for around 233 years, with Microsoft operating for 50 years.
The ‘fusty’ British stocks of Aviva, Imperial Brands, NatWest, Centrica and Marks & Spencer, If you go back to their origins, have a combined history stretching back around 1,056 years.
Though NatWest was formally created in 1970, its origins stretch back to 1861. Centrica is the baby of the group, at around 29-years-old.
‘UK value stocks, long dismissed as dull or ex-growth, are outperforming the Magnificent Seven’, Alan Dobbie, a fund manager of the Rathbone Income Fund, said.
According to the analysis, returns from NatWest shares jumped over 70 per cent in 2025 and just over 40 per cent in Centrica. Meanwhile, shareholders in businesses like Apple, Microsoft and Tesla saw their returns drop.
This shift could mark a ‘turning point in global equity markets, as investors ‘reassess valuations, geopolitical risk and the sustainability of momentum-driven strategies’, the findings said.
On the up: Shares in NatWest have risen by around 70% in the past year
In the past year, Aviva shares have jumped nearly 30 per cent to 649.40p, while Imperial Brands shares are up nearly 20 per cent in 12 months.
For more than a decade, shareholders have often rewarded growth ‘at any price, with value discipline often seen as an unnecessary constraint’, the analysis said.
Now, however, ‘style momentum has become a headwind’.
Dobbie said: ‘Markets are once again scrutinising what’s priced in and we think that changes the environment fundamentally’.
Recent market volatility, ‘narrow leadership’ and heightened geopolitical tensions have pushed risk premia higher, piling pressure on big-name US technology names while UK equities, ‘trading at significant valuation discounts and offering attractive income’, have benefited from renewed investor interest, the research said.
Are markets overreacting to AI fears?
On the artificial intelligence-driven selloff in recent months, Dobbie said he believed markets had been ‘overreacting’ to the perceived winners and losers of AI.
The analysis said the ‘indiscriminate’ selling of established British business stocks on AI fears echoed the earlier ‘distortion’ seen on the way up in US mega-cap technology stocks.
Rathbone Income Fund said it had recently upped its exposure to Relx, which saw its shares drop sharply amid fears over developments in legal AI tools.
It said also had a new position in Experian, whose share price has also been caught in broader AI-related selling.
Last month, Rathbone Income Fund trimmed its positions in Computacenter, Rio Tinto, HSBC, IG Group, GSK, Tesco, BAE Systems and Hiscox.
Meanwhile, holdings were increased in Primary Health Properties, Relx, Compass Group and Bunzl.
It pays to be boring: Britain’s ‘boring’ stocks outperforming America’s Magnificent Seven
Dobbie said that the moves represented a ‘rebalancing’ rather than a wholesale repositioning.
He said: ‘This is not about nostalgia for old-economy stocks. It’s about recognising that markets move in cycles. When valuation and income reassert their importance, outcome-focused strategies come into their own’.
In an update this week, Alex Wright, portfolio manager of Fidelity Special Values Trust and Fidelity Special Situations Fund, said AI-driven disruption to stocks favoured ‘value-oriented investors’.
Wright said: ‘AI-driven volatility is reshaping markets.
‘The last time it felt this opportunistic was during the Covid-19 pandemic, when many high-quality companies traded at deeply depressed valuations even as fundamentals began to stabilise’.
He added: ‘We avoid companies where their stretched valuations rely on long-term certainty.
‘Instead, we focus on attractively valued businesses where the market has overreacted to perceived AI threats and where balance sheets provide strong downside support’.
Wright said his funds had boosted their stakes in Page Group, Robert Hays and Sthree. ‘We are yet to see clear evidence that AI has structurally impaired these businesses’, Wright said.
He added: ‘Markets have indiscriminately punished anything with even indirect AI exposure, often without clear evidence of structural impairment’.
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