The FTSE 100 hit its highest-ever intraday peak on the last day of July, reaching 10,989 points. Over the past year, the index is up 18%, which is impressive considering it’s made up of large-cap stocks. Based on an even longer time period, is this passive way of investing in the market the best way to go?

Passive yielding results

If someone invested £7,777 in the FTSE 100 five years ago, the index would have been at 7,218 points. I’m going to assume they bought a tracker fund for this. If we fast forward to today, that amount would have appreciated by 50.48%. This means the £7,777 would be worth £11,702.83.

Of course, as a passive investment, that’s a very strong return. The question is whether it would have been better to put the money in specific stocks instead and aim for a larger gain. It’s tough to say for certain, as it all depends on which companies would have been selected.

For example, Rolls-Royce has been one of the best-performing large-cap shares over this period. Over the past five years, it has rallied 1,276%! Some will call this an outlier, but I know a lot of people who have profited from the company over the years.

Even if the investor had picked other popular retail stocks, like Lloyds Banking Group, they still would have outperformed the FTSE 100. It’s up 149% in five years.

Granted, to lower the risk, a portfolio of stocks would have been owned to smooth out volatility. And there are plenty of other stocks that have underperformed the index too. But on balance, I still prefer active investing.

Looking ahead

Considering past performance shouldn’t be used to guarantee future returns, I can’t just think about buying the same stocks that have gone up in the past. Instead, any investor needs to focus on the present and what could happen going forward.

To this end, one stock I think could beat the FTSE 100 in coming years is Raspberry Pi (LSE:RPI). Over the past year, it’s up 65%. Unlike much of the FTSE 100, which remains dominated by banks, miners and defensive businesses, Raspberry Pi offers investors exposure to semiconductors and AI.

Granted, it’s not in the FTSE 100 (yet), but the numbers are certainly moving in the right direction. Revenue jumped 25% in 2025, while adjusted EBITDA climbed 25%. Better still, management upgraded its 2026 outlook in June. First-half shipments were expected to exceed four million units, with adjusted EBITDA of at least £21m. For context, this is remarkably close to the figure analysts had previously expected for the entire year.

I think that’s where the potential to outperform the FTSE 100 comes from. Raspberry Pi isn’t simply selling computers to hobbyists anymore. Its low-cost hardware is increasingly embedded in lots of different (and growing) sectors.

Of course, there’s a catch. Expectations have risen dramatically. The shares are volatile, which could put some off. Memory is another concern. AI-driven demand has pushed up DRAM prices, and management expects unit economics to moderate as its stock of cheaper memory gets used up.

Overall, I like the stock and already own it. For those looking for this type of exposure, I think it’s one worth considering.

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Jon Smith does not hold any positions in the companies mentioned.