What is the FTSE 100 Index?

Published by Thomas Herold in Economics, Investments, Trading

'FTSE 100 Index' is explained in detail and with examples in the Trading edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

The FTSE 100 Index proves to be the trading world designation for the largest index managed by the FTSE Group out of London in the United Kingdom. FTSE is actually jointly owned by parent companies the Financial Times and the London Stock Exchange. This mash up of FT from Financial Times and SE from London Stock Exchange is how they arrive at the acronym FTSE. In general when analysts refer to the FTSE, they mean the FTSE 100 Index itself. This is actually a misnomer, since there are literally thousands of different FTSE indices the company owns and operates around the globe on numerous different national stock exchanges on every continent.

This FTSE 100 Index has been called the globe’s most heavily referenced and most popular stock market index throughout the world. In practice, it represents around 80 percent of the entire market capitalization of the heavily multinational London Stock Exchange. The weighting system the FTSE company utilizes means that the bigger a corporation is, the larger a share of the index it occupies, thanks to it being a market capitalization-weighted index. This index is real time calculated all trading day long. The firm updates and publishes it continuously throughout the open market hours on an every 15 seconds basis.

Many analysts and investors rely on the FTSE 100 Index as some sort of prosperity indicator for British companies and the United Kingdom economy in general. This is actually a misnomer. It is all thanks to a significant constituency of the representative firms from the index being headquartered in other nations throughout the globe. It means that the index’s daily movements do not truly reflect the strength of the British economy and corporations. Instead, the secondary index of the group, the FTSE 250 is more accurate a bell weather for British businesses and the economy. This is because a far smaller representation of international corporations populates the 250 index. It makes it a much better indicator for Great Britain generally speaking.

FTSE the company decides every quarter which are the 100 largest member companies on the LSE. Their tradition is to calculate this on the Wednesday after the first Friday of the month for March, June, September, and December, respectively. They utilize the business day close values from the night before to decide if any constituents should be replaced.

It is no exaggeration to call the FTSE 100 Index the Blue Chip index of the London Stock Exchange. These are the largest and most economically powerful and far-reaching corporations from Great Britain and around the world (ex the United States) in many cases.

The constituent members of the FTSE 100 as of time of publication were as follows: 3I Group, Associated British Foods, Admiral Group, Anglo American, Antofagasta, Ashtead Group, AstraZeneca, Aviva, Babcock International, BAE Systems, Barclays, Barratt Development, BHP Billiton, BP, British American Tobacco, British Land, BT Group, Bunzl, Burberry Group, Carnival, Centrica, Coca Cola HBC AG, Compass Group, Convatec, CRH, Croda International, DCC, Diageo, Direct Line, Easy Jet, Experian, Fresnillo, GKN, GlaxoSmithKline, Glencore, Hammerson, Hargreaves Lans, Hikma, HSBC Bank Holdings, Imperial Brands, Informa, Intercontinental Hotels, Intertek Group, International Consolidated Airlines, INTU Properties, ITV, Johnson Matthey, Kingfisher, Land Securities, Legal & General, Lloyds Group, London Stock Exchange, Marks & Spencer, Medi clinic, Merlin, Micro Focus, Mondi, William Morrison, National Grid, Next, Old Mutual, Paddy Power Betting, Pearson, Persimmon, Provident Financial, Prudential, Randgold Res., RDS A Shares, RDS B Shares, Reckitt Benison Group, RELX, Rentokil International, Rio Tinto, Rolls Royce Holdings, Royal Bank of Scotland, Royal Mail, RSA Insurance, Sage Group, J. Sainsbury, Schroders, Scottish Mort, Severn Trent, Shire Pharmaceuticals, Sky PLC, Smith & Nephew, Smiths Group, Smurfit Kap., SSE, St. James’s Place, Standard Chartered, Standard Life, Taylor Wimpey, Tesco, TUI AG, Unilever, United Utilities, Vodafone Group, Whitbread, Wolseley, Worldpay Group, and WPP Group (the world’s leading advertising company giant).

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The term 'FTSE 100 Index' is included in the Trading edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.