30-590: The Financial Times Stock Exchange 100 Index , also called the FTSE 100 Index , FTSE 100 , FTSE , or, informally, the " Footsie " / ˈ f ʊ t s i / , is the United Kingdom's best-known stock market index of the 100 most highly capitalised blue chips listed on the London Stock Exchange . Founded in 1984 by Stock Exchange to better reflect activity on the market, it replaced
60-557: A r e s i × F r e e f l o a t a d j u s t m e n t f a c t o r i I n d e x d i v i s o r {\displaystyle \mathrm {Index~level} ={\frac {\sum _{i}\mathrm {Price~of~stock} _{i}\times \mathrm {Number~of~shares} _{i}\times \mathrm {Free~float~adjustment~factor} _{i}}{\mathrm {Index~divisor} }}} The free float adjustment factor represents
90-461: A market cap exceeding £100 billion: Shell , AstraZeneca , HSBC and Unilever , which together accounted for approximately 30% of the market cap. Each calendar quarter, the FTSE's constituents are reviewed and some companies exit or enter the index, resulting in irregular trading volume and price changes as market participants rebalance their portfolios . The index has trading symbol UKX and
120-423: A stock index , or stock market index , is an index that measures the performance of a stock market , or of a subset of a stock market. It helps investors compare current stock price levels with past prices to calculate market performance. Two of the primary criteria of an index are that it is investable and transparent : The methods of its construction are specified. Investors may be able to invest in
150-602: A fairly weak indicator of how the UK economy is faring and are significantly affected by the exchange rates of the pound sterling. A better indication of the UK economy is the FTSE 250 Index , as it contains a smaller proportion of international companies. Even though the FTSE All-Share Index is more comprehensive, the FTSE ;100 is by far the most widely used UK stock market indicator. Other related indices are
180-486: A new index, major privatisations, LIFFE tradable derivatives, and promotion by the Financial Times led to the FTSE 100 becoming the most widely used indicator of whether the UK stock market was rising or falling. In 1987, privatisations continued with British Airways and British Petroleum . The latter concluded on the same day as Black Monday , a crash in which the index fell 21.73% in two days; one of those days
210-442: A stock index that complies with Sharia 's ban on alcohol, tobacco and gambling. Critics of such initiatives argue that many firms satisfy mechanical "ethical criteria" (e.g. regarding board composition or hiring practices) but fail to perform ethically with respect to shareholders (e.g. Enron ). Indeed, the seeming "seal of approval" of an ethical index may put investors more at ease, enabling scams. One response to these criticisms
240-524: A stock market index by buying an index fund , which is structured as either a mutual fund or an exchange-traded fund , and "track" an index. The difference between an index fund's performance and the index, if any, is called tracking error . Stock market indices may be classified and segmented by the set of underlying stocks included in the index, sometimes referred to as the "coverage". The underlying stocks are typically grouped together based on their underlying economics or underlying investor demand that
270-465: Is 10 GBP × index points and is specified as: The index has reached the following record values: The index began on 3 January 1984 at the base level of 1,000. The highest closing value of 8,445.80 was reached on 15 May 2024 and the highest intra-day value of 8,474.71 was also reached on 15 May 2024. The following table shows the annual development of the calculation of the FT 30 Index from 1969 to 1983, and
300-509: Is largely obsolete due to its redundancy. It is similar to the Dow Jones Industrial Average , and companies listed are from the industrial and commercial sectors. Financial sector companies and government stocks are excluded. Of the original constituents, three are currently in the FTSE 100: Tate & Lyle, Imperial Tobacco and Rolls-Royce, although Rolls-Royce has not been continuously listed and Imperial Tobacco
330-480: Is maintained by FTSE Russell , a wholly owned subsidiary of London Stock Exchange Group , which originated as a joint venture between the Financial Times and the London Stock Exchange . It is calculated in real time and published every second when the market is open. The FTSE 100 Index with its 100 constituents was launched on 3 January 1984. The market capitalisation weighted FTSE 100 index replaced
SECTION 10
#1732772480030360-402: Is still the index's worst single-day return, –12.22%. The index consists of 32 sectors , four of which had a market capitalisation exceeding £200 billion as of 28 June 2024. These are pharmaceuticals , oil and gas , metals and mining and banking services , which together account for approximately 46% of the index's capitalisation. On the same date, there were four companies with
390-472: Is that investors must, in aggregate, hold a capitalization-weighted portfolio anyway. This then gives the average return for all investors; if some investors do worse, other investors must do better (excluding costs). Passive management is an investing strategy involving investing in index funds, which are structured as mutual funds or exchange-traded funds that track market indices. The SPIVA (S&P Indices vs. Active) annual "U.S. Scorecard", which measures
420-451: Is that trust in the corporate management, index criteria, fund or index manager, and securities regulator, can never be replaced by mechanical means, so " market transparency " and " disclosure " are the only long-term-effective paths to fair markets. From a financial perspective, it is not obvious whether ethical indices or ethical funds will out-perform their more conventional counterparts. Theory might suggest that returns would be lower since
450-619: The Calvert Social Index , Domini 400 Social Index , FTSE4Good Index , Dow Jones Sustainability Index , STOXX Global ESG Leaders Index, several Standard Ethics Aei indices, and the Wilderhill Clean Energy Index. Other ethical stock market indices may be based on diversity weighting (Fernholz, Garvy, and Hannon 1998). In 2010, the Organization of Islamic Cooperation announced the initiation of
480-544: The Financial Times ' own FT 30 . A new index allowed Stock Exchange to launch the options contract derived from the FTSE's real-time data, while competitors LIFFE launched the futures contract . By 1986, Margaret Thatcher 's sweeping financial deregulation and high profile privatisations of index members British Telecom , British Gas , and British Aerospace had culminated in the Big Bang . The combination of
510-634: The FTSE 100 since 1984. The following table lists the FTSE 100 companies after the changes on 1 October 2024. All changes are due to market capitalisation unless noted otherwise. Source: "FTSE: FTSE 100 Constituent Changes" ( PDF; 57.9 KB ) The oldest continuous index in the UK is the FT ;30, also known as the Financial Times Index or the FT Ordinary Index ;(FTOI). It was established in 1935 and nowadays
540-534: The FTSE 250 Index (which includes the next largest 250 companies after the FTSE 100), the FTSE ;350 Index (which is the aggregation of the FTSE 100 and 250), FTSE SmallCap Index and the FTSE Fledgling Index . The FTSE All-Share aggregates the FTSE 100, FTSE 250 and FTSE SmallCap. In the FTSE indices, share prices are weighted by free-float capitalisation, so that
570-465: The S&;P 500 Index, have multiple versions. These versions can differ based on how the index components are weighted and on how dividends are accounted. For example, there are three versions of the S&P 500 Index: price return, which only considers the price of the components, total return, which accounts for dividend reinvestment, and net total return, which accounts for dividend reinvestment after
600-420: The deduction of a withholding tax . The Wilshire 4500 and Wilshire 5000 indices have five versions each: full capitalization total return, full capitalization price, float-adjusted total return, float-adjusted price, and equal weight. The difference between the full capitalization, float-adjusted, and equal weight versions is in how index components are weighted. One argument for capitalization weighting
630-689: The index is seeking to represent or track. For example, a 'world' or 'global' stock market index—such as the MSCI World or the S&;P Global 100 —includes stocks from all over the world, and satisfies investor demand for an index for broad global stocks. Regional indices that make up the MSCI World index, such as the MSCI Emerging Markets index, include stocks from countries with a similar level of economic development, which satisfies
SECTION 20
#1732772480030660-594: The investible universe is artificially reduced and with it portfolio efficiency. (It conflicts with the Capital Asset Pricing Model, see above.) On the other hand, companies with good social performances might be better run, have more committed workers and customers, and be less likely to suffer reputation damage from incidents (oil spillages, industrial tribunals, etc.) and this might result in lower share price volatility , although such features, at least in theory, will have already been factored into
690-473: The investor demand for an index for emerging market stocks that may share similar economic fundamentals. The coverage of a stock market index is separate from the weighting method. For example, the S&P 500 market-cap weighted index covers the 500 largest stocks from the S&P Total Market Index, but an equally weighted S&P 500 index is also available with the same coverage. Stock market indices may be categorized by their index weight methodology, or
720-456: The larger companies, with more of their stock "floating", make more of a difference to the index than smaller companies. The basic formula for these indices is: I n d e x l e v e l = ∑ i P r i c e o f s t o c k i × N u m b e r o f s h
750-400: The market price of the stock. The empirical evidence on the performance of ethical funds and of ethical firms versus their mainstream comparators is very mixed for both stock and debt markets. FTSE 350 Index The FTSE 350 Index is a market capitalization weighted stock market index made up of the constituents of the FTSE 100 and FTSE 250 indices. The FTSE 100 Index comprises
780-527: The percentage of all issued shares that are readily available for trading, rounded up to the nearest multiple of 5%. The free-float capitalisation of a company is its market capitalisation multiplied by its free float adjustment factor. It therefore does not include restricted stocks, such as those held by company insiders. FTSE futures contracts are traded on the Euronext Equities & Index Derivatives (EUREID) exchange. The value of each contract
810-452: The performance of indices versus actively managed mutual funds, finds the vast majority of active management mutual funds underperform their benchmarks, such as the S&P 500 Index, after fees. Unlike a mutual fund, which is priced daily, an exchange-traded fund is priced continuously and is optionable . Several indices are based on ethical investing , and include only companies that meet certain ecological or social criteria, such as
840-417: The price-weighted FT30 Index as the performance benchmark for most investors. The FTSE 100 broadly consists of the largest 100 qualifying UK companies by full market value. The total market value of a company is calculated by multiplying the share price of the company by the total number of shares they have issued. However, many of these are internationally focused companies: therefore the index's movements are
870-498: The rules on how stocks are allocated in the index, independent of its stock coverage. For example, the S&P 500 and the S&P 500 Equal Weight each cover the same group of stocks, but the S&P 500 is weighted by market capitalization , while the S&P 500 Equal Weight places equal weight on each constituent. Some common index weighting methods are listed below. In practice, many indices will impose constraints, such as concentration limits, on these rules. Some indices, such as
900-449: Was a subsidiary of Hanson for a number of years, and is now renamed as Imperial Brands. Only one of the original FT 30 companies is still in that index: Tate & Lyle (membership is not strictly based on market capitalisation, so this does not mean they are necessarily among the top thirty companies in the FTSE 100). The best performer from the original lineup has been Imperial Tobacco. Stock market index In finance ,
#29970