Ask most investors which index has performed strongly over the past year, and they’d say the S&P 500. This is true, but there’s more to the story.

I’ve been thinking about my portfolio quite a lot lately and where I think the best value and growth opportunities lie for the next decade. And the truth is, if you handed me a lump sum today I would still pick the unglamorous FTSE 100 without hesitation. Here’s why.

Digging into recent performance

Over the past 12 months, the US large-cap index has returned 15.8%, edging out the Footsie’s 14.8% over the same period.

On £10,000 invested a year ago, that’s the difference between £11,575 and £11,480, a gap of just £100.

Short-term snapshots rightfully capture investors’ attention. But the key for me lies behind the headline performance figures, and I think the Footsie provides a better risk-adjusted return for my own goals.

So, what is actually driving each of these indices as we sit here today?

Why concentration worries me

The S&P 500’s strength has increasingly come from a small handful of enormous technology companies. When a few names account for such a large share of an index’s total value, its fate becomes tied to the fortunes of those businesses rather than the broader economy.

The Footsie looks very different, spreading its weighting across financials, energy, healthcare, and mining, with no single sector dominating in the same way. That might make it less exciting than its tech-driven US counterpart, but that makes a huge difference to me as an investor.

HSBC (LSE: HSBA) has risen more than 50% over the past year, comfortably outpacing both indices.

With a market cap of £264.87bn, it is one of the Footsie’s most significant constituents, and its strong recent performance illustrates precisely the kind of diversification I value in the UK large-cap index.

The shares have climbed because the market increasingly views HSBC as a high-return, cash-generative Asia-focused bank.

Better-than-expected profits, resilient interest income, growth in its Asian fee businesses, strong capital generation, and renewed buybacks have all supported the move. At a price-to-earnings (P/E) ratio of 14.9 and a dividend yield of 3.6%, the stock still looks reasonably priced given that growth story.

This is exactly the kind of diversification opportunity that a broad, sector-varied index like the Footsie can offer. The question for investors like you and me is: what are the risks?

The risks I’m accepting

The Footsie has consistently lagged the S&P 500 over most multi-year periods, and its heavier weighting toward financials and energy can mean underperformance when growth stocks are in favour.

Dividend income also makes up a larger share of the Footsie’s total return, which suits my own approach but will not appeal to everyone. HSBC as a stock carries risk too, since a slowdown in Asian growth or renewed margin pressure could quickly reverse investor sentiment.

My verdict

In my view, the small 12-month performance lag of the Footsie tells you very little about the relative prospects of each index over the medium-to-long-term.

I personally would rather invest in an index with a broader sector spread and genuine standout stories like HSBC sitting alongside other genuinely exciting prospects that I think deserve more attention right now.

Should you invest £5,000 in HSBC Holdings right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if HSBC Holdings made the list?

Ken Hall does not hold any positions in the companies mentioned.