FTSE 100

The FTSE 100 is Britain's 'blue-chip' stock index.But its makeup means it is more of a global index than a snapshot of UK plc.

The FTSE 100, often referred to as the "Footsie", is a stockmarket index that measures the performance of the shares of the 100 largest companies by market value listed on the London Stock Exchange. The FTSE 100 is often called the "blue chip" index as the companies are meant to represent the biggest and best of their kind the former adjective is true, the latter not necessarily so.

By the standards of other developed world stockmarkets, the FTSE 100 is unusually skewed towards the resources sector: oil and gas groups and miners collectively make up just over a fifth of the index. This helps to explain why it has trailed the performance of many of its major counterparts in recent years.

Note, too, that many of the UK's biggest companies are internationally focused (which is more typical for a big stockmarket index). Around 70% of the FTSE 100 companies' revenue is derived from abroad. That makes movements in the FTSE 100 a fairly weak indicator of how UK businesses and the economy are faring and also leaves it quite heavily exposed to currency fluctuations, particularly changes in the value of the US dollar.

A better measure of the health of UK-focused businesses is the FTSE 250, an index which lists the next-biggest 250 companies by market value, and which contains a smaller proportion of international companies.

The FTSE 100 was first created in 1983, when it had an index value of 1,000. It replaced the FT index. The index is calculated by FTSE Group, an independent company originally created by the London Stock Exchange and Pearson, then-owner of the Financial Times. The company calculates thousands of other indices a day, including the FTSE All Share, which is made up of the prices of every listed London share.

Recommended

How the FTSE 100 could get propelled to 10,000
FTSE 100

How the FTSE 100 could get propelled to 10,000

It would have seemed crazy just months ago, but British blue-chip stocks are about to get a big boost that could take the FTSE 100 index to 10,000, sa…
21 Mar 2021
UK stocks: how the FTSE 100 is finding its feet again
UK stockmarkets

UK stocks: how the FTSE 100 is finding its feet again

The FTSE 100, Britain’s blue-chip stockmarket index, has undergone constant churn in the 37 years since its inception, says Max King. But it is now …
12 Feb 2021

Most Popular

Amazon halts plans to ban UK Visa credit card payments
Personal finance

Amazon halts plans to ban UK Visa credit card payments

Amazon has said that it is to shelve its proposed ban on UK customers making payments with Visa credit cards.
17 Jan 2022
Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022