The performance of the FTSE 250 index in 2025 has been disappointing, with a modest increase of just 7.4% since the beginning of the year. In stark contrast, the FTSE 100 has seen a double-digit rise, leaving many investors questioning the future of the UK stock market’s so-called growth engine. An initial investment of £5,000 in the FTSE 250 at the start of the year is now worth approximately £5,369, a reflection of the index’s lackluster performance.
While the overall index struggles, certain stocks, such as Anglo-Eastern Plantations (LSE:AEP), have delivered exceptional returns. The palm oil producer’s shares have more than doubled, increasing by about 110% since January. For investors who placed £5,000 in Anglo-Eastern at the beginning of 2025, the investment is now valued at around £10,500, not including dividends.
Underlying Causes of FTSE 250’s Underperformance
The FTSE 250’s disappointing trajectory can be attributed to waning investor interest in UK-focused companies. With economic uncertainty looming over the UK, many investors are withdrawing funds from UK equity markets at an unprecedented rate. This withdrawal has contributed to lower valuations across the index.
The private equity sector has reacted to this situation, leading to a surge in takeover attempts. Since January 2025, approximately £28 billion worth of acquisitions have been either completed or are pending. This trend is compounded by a scarcity of initial public offerings (IPOs), further reducing the size of the FTSE 250 as companies are absorbed into private equity.
Anglo-Eastern’s Strong Performance and Future Potential
In contrast to the broader index, Anglo-Eastern has thrived as a global commodities business, unaffected by the skepticism surrounding the British economy. The company’s management has successfully increased production while palm oil prices have risen. As a result, Anglo-Eastern reported a 39% boost in revenue in the first half of 2025, along with a striking 78% surge in pre-tax profits.
Looking ahead, Anglo-Eastern is poised for continued growth as it expands its plantation portfolio and constructs a new mill to enhance production capacity. Additionally, Indonesia’s upcoming Biodiesel B50 mandate, expected to be implemented by mid-2026, is projected to significantly increase crude palm oil consumption. Analysts suggest this rise in demand could further elevate prices and bolster the company’s profit margins.
One analyst has projected that Anglo-Eastern’s stock price could reach 1,700 pence by the same time next year, translating into a potential capital gain of 27.8% along with an estimated 4.9% dividend yield. This scenario could transform an initial investment of £5,000 into approximately £6,634.
While the forecast appears promising, potential investors should remain cautious. Stricter environmental regulations regarding palm oil production could increase operational costs. Weather-related challenges in Indonesia could also negatively impact crop yields, posing risks to the company’s growth trajectory.
Despite these uncertainties, Anglo-Eastern Plantations represents a compelling opportunity within the FTSE 250. As the market navigates through these turbulent times, its performance merits further exploration for those seeking investment options.
