What is the FTSE 100 and how do you invest and trade it?

Overall, while the FTSE 100 strives for accuracy and consistency in company eligibility, occasional anomalies or unintentional inclusions/exclusions can occur due to extraordinary events or market dynamics. For example, a company’s market capitalization may experience significant, sudden volatility, causing it to move in and out of the FTSE 100. The index also acts as a useful performance benchmark that investors use to gauge the type of stocks to buy or sell. When the index level is rising, then it means the overall stock market is bullish which means investors are looking for buy opportunities in the broader market. The company has survived some of the worst oil price crisis over the years over the years and still going strong. The company boasts of an annual dividend of more than 5% which justifies its position in the list, in addition to a strong market cap.

Financial Times Stock Exchange Group (FTSE): Definition

The performance of the FTSE 100 also paints a clear picture of current international and economic events given that a good number of companies in the index do business around the world. The FTSE Group also monitors bonds held and issued by the companies listed as a way of ascertaining their financial stability. FTSE 250 — the next tier down, so the 101st to the 350th largest companies. Some well-known companies in the FTSE 250 include household names such as easyjet, Dunelm,  Domino’s Pizza and WH Smiths.

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​Furthermore the scale of buyback activity suggests corporate confidence in valuations and future prospects. This trend has supported share investing opportunities, especially when bargain hunters recently stepped in around the psychological 8,000 mark. FTSE Russell owns Mergent and Mergent Online, a leading data and reference provider for academic and professional research and study. Their database houses archives of corporate records and references that date back as far as 100 years.

For the first time in at least six years, there are no black executives holding top positions at FTSE 100 companies, said staffing firm Green Park. In 2010, the joint venture with Xinhua Finance was terminated,3 the index series was renamed into FTSE China Index Series; the Hong Kong incorporated company was renamed to “FTSE China Index Limited”. Use our data, reviews and comparison to switch to a more appropriate broker so you can reduce your fees. Since then, its makeup has changed to reflect mergers and acquisitions as well as entering and exiting companies, underscoring its function as a barometer of market activity. A FTSE 100 company simply refers to a publicly listed company that is part of the Financial Times Stock Exchange 100 Index, commonly known as the FTSE 100.

The basic principles of the FTSE Indexes explained

As the FTSE 100 is an index, it is impossible to invest directly in the index. To get exposure to the index, investors can invest in exchange-traded funds that track and invest in the companies listed in the index. The FTSE 100 index is a capitalization-weighted index, which means that companies with larger market capitalizations have a greater influence on the index’s movements. As a result, changes in the share prices of larger companies will have a bigger impact on the overall index value compared to smaller companies. The market capitalization used for listing is calculated by multiplying the number of shares issued by the current share price. Should the market cap of a company listed in the FTSE 250 rise and fall within the top 90 companies in the FTSE 100, the council is obliged to add it and downgrade one company to the second tier index.

​A possible year-end forecast may be the 8,400 level but were it to be exceeded, it is likely that a new record high above the 8,474 May peak may be made in light volume towards the end of the year. ​Potential slips are expected to find support between the 55- and 200-day simple moving averages (SMAs) at 8,224-to-8,129 since the September-to-early October lows can also be found within this area. ​Since the FTSE 100 tends to sideways trade for several months before finding a new, higher equilibrium, we expect to see a similar step change in 2025. ​These projections indicate a further 7% growth to £83.9 billion in 2025, though still falling short of the index’s all-time high of £85.2 billion set in 2018. ​This underperformance was even greater in mid-November when the FTSE 100 was trading around its psychological 8,000 mark and was up less than 5% YTD then.

In October, the company announced it would transfer its UK listing to the new Equity Shares (Commercial Companies) category, making it eligible for the FTSE 100 during the December review. If everything goes ahead as planned, it’s a look at the current trading paradigm expected to join the index in March 2025. Subsequently, a massive £28.6bn company that’s been on the London Stock Exchange (LSE) since 2019 might soon join the FTSE 100. Stay on top of upcoming market-moving events with our customisable economic calendar. For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

1. The make-up of the indexes is determined by the total market capitalisation of the companies.
2. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument.
3. Many of these companies are well-known names such as BP, HSBC and Tesco, while others will probably be less familiar.
4. ​Since the FTSE 100 tends to sideways trade for several months before finding a new, higher equilibrium, we expect to see a similar step change in 2025.
5. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.

The make-up of the different FTSE indexes on the Main Market is determined by a company’s market capitalisation. In simple terms this is the number of shares the company has issued, multiplied by the current share price. Quite often market capitalisation is referred to as the market value of a company. In order to be included in the FTSE 100, a share must axi review fulfill certain criteria. The composition of the FTSE 100 and the weighting of the shares included in it are reviewed twice annually and adjusted when necessary. Investing in a tracker fund means you could save money in dealing fees.

When the FTSE 100 came into being in 1984, it started at a notional value of 1,000 points. Over the years, the number has experienced swings based on the performance of the companies listed. Given that, the index is currently trading at about 7,000, it means that U.K top 100 companies have grown by more or less 600% over time. The U.S. version of this would be the S&P 500, which tracks the top How to buy kava 500 U.S. companies by market cap, or the Dow Jones Industrial Average (DJIA), which tracks 30 prominent U.S. companies. Examples of funds that track these indices are the Vanguard FTSE 100, the Vanguard FTSE 250, the iShares 350 U.K.

Investors can purchase exchange-traded funds (ETFs) or mutual funds that track the performance of the FTSE 100 index. The FTSE 100 employs a market capitalization-weighted methodology, which means that companies with larger market capitalizations have a greater impact on the index’s movements as a percentage. This approach ensures that the index reflects the relative size and importance of the constituent companies. As a result, the share prices and market values of larger companies in the FTSE 100 can have a more significant effect on the index compared to smaller companies. Given that the FTSE 100 lists the top 100 companies by market cap, the FTSE 250 lists the next 250 companies by size. The value of the FTSE 250 accounts for about 15% of the total value of the U.K’s equity market.

The takeaway here is that you shouldn’t necessarily expect the indexes to always move up and down in parallel. There may be different factors at play that are causing the share prices of the companies within each index to go up and down. FTSE 100 — the largest 100 companies based on market capitalisation. The biggest companies in the FTSE 100 include global giants such as HSBC, Shell and BP. FTSE Russell provides access to global financial data on equities, fixed income, corporate actions, sustainability, and exchange-traded funds. The data sets collected are significant enough to allow for the creation of indexes, methodologies, risk management, compliance, and research across a broad spectrum of global products.