Over the past 10 years, the FTSE 100 main index of shares has delivered a mean annual return of 6.3%. That’s just a few proportion factors under the long-term common stretching again to the Footsie‘s creation in 1984.

Can it decide up the tempo over the subsequent decade? I’m quietly assured it will possibly, as fading urge for food for US shares drives investor curiosity in cheaper UK shares.

Nonetheless, a greater approach to supply superior returns might be by buying particular person shares than a FTSE tracker fund. Each BAE Programs (LSE:BA.) and JD Sports activities Style (LSE:JD.) are blue chips I feel may outperform the broader index by to 2035.

Right here’s why.

BAE Programs

Defence large BAE Programs has already confirmed it has what it takes to beat the broader FTSE 100.

Since 2015, the tier one contractor’s share price has risen from 423p per share to £19.54 right now. It’s additionally paid dividends totalling 235.3p per share.

As a consequence, BAE shares have delivered a mean annual return of 17.9% over the interval.

The majority of those positive aspects have come following Russia’s invasion of Ukraine in 2022. Gross sales since then have soared as key NATO prospects have quickly rearmed — BAE’s order guide was a report £77.8bn on the finish of final 12 months.

I’m optimistic the corporate’s shares can proceed rising strongly as, no matter an unsure outlook for US arms army spending, cumulative arms expenditure within the West nonetheless seems to be set to ignite. NATO members are anticipated to comply with spend 3.5% of their GDPs by 2035 on the safety bloc’s subsequent summit later this month.

One potential impediment might be the traditionally excessive valuation that BAE shares at the moment instructions. Its ahead price-to-earnings (P/E) ratio is 25.5 occasions, making it one of many UK’s most costly defence shares.

Nonetheless, I feel the FTSE 100’s huge scale and market-leading positions in a number of areas warrant such a premium. It may show the most effective shares to purchase because the geopolitical panorama adjustments.

JD Sports activities Style

Not like BAE Programs, JD Sports activities shares have sunk in worth extra just lately. But over a very long time horizon the retailer’s nonetheless outperformed the broader Footsie index.

At 82.1p per share right now, the sportstwear specialist is considerably costlier than it was 10 years in the past when it modified fingers at 26.3p. With it paying complete dividends of 4.91p per share, too, the full common annual return right here is 12.7%.

JD’s robust historic efficiency was due to the power of its market place within the fast-growing athleisure market, and extra particularly on the premium finish which has expanded particularly quickly. It’s additionally mirrored the corporate’s profitable world growth technique which provides it footholds in Europe, North America, and Asia.

However the firm faces severe challenges that would compromise future efficiency. Retail gross sales are below strain as shoppers tighten their pursestrings, leading to its weakening share price extra just lately. And gross sales may worsen and prices balloon if bruising commerce tariffs stay in place.

I’d argue, although, that these dangers are mirrored in JD’s ultra-low valuation right now. It trades on a ahead P/E ratio of simply 7.1 occasions, properly under its 10-year common of 16-17 occasions. This supplies a base from which the corporate may rebound, as persevering with worldwide growth helps a long-term gross sales restoration.