Exploring the real wealth creation in U.K. stocks

Abstract This study uses the approach of Bessembinder (J Fin Econ 129:440–457, 2018) to examine the real wealth creation of U.K. individual stocks between January 1975 and December 2024. The study finds that across the whole sample period, real wealth creation is highly concentrated and only 3.1% of stocks generate the aggregate net wealth created. Splitting the sample into two subperiods according to the Big Bang in October 1986, we find that in the pre Big Bang period real wealth creation by U.K. stocks is a lot less concentrated and the majority of stocks provide a higher buy and hold real return than U.K. Treasury Bills. Forming a Wealth trading study, which selects the stocks with the highest real wealth creation, that there are some performance benefits but only when equal weights are used.