FTSE 100 Index Explained in Detail

The FTSE 100 Index is a widely followed benchmark of the UK's top-performing companies. It's a market-capitalization-weighted index, meaning the companies with the largest market capitalization have a greater influence on the index's performance.

The index is made up of the 100 largest and most liquid companies listed on the London Stock Exchange. This ensures that the index accurately reflects the performance of the UK's largest and most influential companies.

The FTSE 100 Index has a base value of 1000, which was set on December 3, 1984. This allows investors to track the index's performance over time and make informed investment decisions.

The index is reviewed quarterly by the FTSE Group, with any changes taking effect at the start of the new quarter. This ensures that the index remains up-to-date and accurately reflects the changing landscape of the UK's largest companies.

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The FTSE 100 Index is a benchmark of the UK's largest companies, comprising the top 100 most highly capitalized blue-chip companies listed on the London Stock Exchange.

Launched in 1984, it's a market capitalization-weighted index, meaning companies with higher market caps carry bigger weight.

The index is calculated in real-time and updated every 15 seconds, making it a dynamic and constantly changing reflection of the UK's economic health.

The FTSE 100 Index is maintained by FTSE Russell, a subsidiary of the London Stock Exchange Group, and is a widely used gauge of the stock market's performance.

It's worth noting that the index is not a perfect reflection of the UK economy, as many of its constituents are internationally focused companies.

The FTSE 100 Index is calculated by multiplying the share price of each company by the total number of shares they have issued, giving a total market value for each constituent.

The largest companies in the index exert the biggest influence on its overall performance, with companies like Royal Dutch Shell PLC and HSBC Holdings PLC currently holding the top spots.

Investing in the FTSE 100 Index is a great way to get exposure to the UK's largest companies. You can invest in a FTSE 100 tracker fund, which is a low-cost way to track the performance of the index.

The costs of investing in a FTSE 100 tracker fund are relatively low, with platform charges ranging from 0.25% to 0.2% per year, depending on the fund and platform you choose.

You can also invest in FTSE 100 shares or an ETF, but this typically involves higher costs, including a fixed fee for each trade you make, which can be £10.50 per trade.

Investing in a tracker fund means you're not putting all your eggs in one basket, as the fund aims to track the performance of the FTSE 100 index, which includes many different companies.

Here are the typical costs associated with investing in a FTSE 100 tracker fund:

Alternatively, you could consider investing in other indices, such as the FTSE 250, which tracks medium to smaller sized publicly listed companies, or European or US indexes.

The FTSE 100 Index has reached record values, with a highest closing value of 8,445.80 on 15 May 2024, and a highest intra-day value of 8,474.71 also on 15 May 2024.

The index began on 3 January 1984 at the base level of 1,000. This milestone marked the starting point of the FTSE 100's journey, which has seen significant growth and fluctuations over the years.

The index has experienced notable growth, with a highest annual return of 35.11% in 1989, and a lowest annual return of -31.33% in 2008.

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In the FTSE indices, share prices are weighted by free-float capitalisation, which means larger companies have more of an impact on the index than smaller ones.

This method takes into account the free float adjustment factor, which represents the percentage of all issued shares that are readily available for trading, rounded up to the nearest multiple of 5%. The free float adjustment factor is a crucial component of the weighting process.

The formula for calculating the index level is quite complex, but essentially it's the sum of the price of each stock multiplied by the number of shares and the free float adjustment factor, all divided by the index divisor.

The free float capitalisation of a company is its market capitalisation multiplied by its free float adjustment factor. This means it doesn't include restricted stocks, such as those held by company insiders.

The weighting method used in the FTSE indices aims to provide a fair representation of the market, giving more weight to companies with a larger free float.

The FTSE 100 index has reached an all-time high of 8,445.80, which occurred on 15 May 2024.

This milestone was achieved after a significant increase in the index's value over the years. The index began on 3 January 1984 at the base level of 1,000.

The record values for the index are impressive, with the highest closing value and highest intra-day value both being reached on the same day, 15 May 2024. The highest closing value of 8,445.80 was a significant increase from the base level of 1,000.

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Here is a brief overview of the index's performance over the years:

The index has experienced significant fluctuations over the years, with some years showing significant growth and others showing significant decline. For example, in 1989, the index increased by 629.60 points, while in 2008, it decreased by 2,022.74 points.

The index has shown resilience in the face of economic downturns, with the 2020 decline of 1,081.92 points being followed by a 2021 increase of 924.02 points.

The Dividend Points Indices provide a way to track the cumulative value of ordinary cash dividends declared by the constituents of the FTSE 100 Index. These indices are calculated on the ex-dividend date and expressed in index points.

The FTSE 100 Declared Dividend Index (F1DIVD) and the FTSE 100 Dividend Index (F1DIV) are two indices that represent the cumulative value of dividends declared by the constituents of the FTSE 100 Index. Both indices are rebased to 0 at the start of the trading day following the third Friday in December each year.

The FTSE 100 Declared Dividend Index (F1DIVD) does not make withholding tax adjustments, which means it includes all dividends declared without any deductions. Prior to 31 January 2022, an exception was made for Royal Dutch Shell A Shares, which had a 15% withholding tax deducted.

The FTSE 100 Cumulative Dividend Points Index (UKXCD) is another index that represents the cumulative value of dividends declared by the constituents of the FTSE 100 Index. This index does not make withholding tax adjustments either and is not rebased annually.

Here are the main characteristics of the Dividend Points Indices:

The FTSE 100 Index is made up of 100 of the largest and most liquid companies listed on the London Stock Exchange. These companies are selected based on their market capitalization.

The index is a free-float market-capitalization-weighted index, meaning that the companies with the largest market capitalization have a greater influence on the index's performance. The index includes companies from various sectors such as financials, industrials, consumer goods, and more.

The FTSE 100 Index is reviewed quarterly by the FTSE Group, a leading global index provider. Companies that meet the eligibility criteria are added to the index, while those that do not meet the criteria are removed.

The index is calculated in real-time, providing investors with up-to-the-minute information on the performance of the UK's largest companies. This allows investors to make informed decisions about their investments.

The FTSE 100 Index has a wealth of resources available for those looking to learn more about it.

The FTSE UK Index Series Overview is a great place to start, providing a comprehensive look at the index.

This overview is available as a 556.0KB PDF download.

For those interested in the history of the index, the FTSE UK Index Series Historic Ground Rule Updates is a valuable resource.

It's a 276.8KB PDF that provides insight into the changes that have occurred over time.

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If you have questions about the UK Series Review, the FAQ - 2025 is a helpful resource.

It's a concise 131.7KB PDF that answers common questions.

The FTSE 100 Adds and Deletes document is a must-read for those looking to understand the composition of the index.

It's a 398.7KB PDF that lists the companies that have been added and deleted from the index.

Here are some key resources to get you started:

The FTSE 100 Index has a wealth of resources available for investors and researchers.

The FTSE UK Index Series Overview is a comprehensive guide to the index, providing a detailed explanation of its structure and methodology. This 556.0KB PDF is a must-read for anyone looking to understand the FTSE 100.

Historic Ground Rule Updates for the FTSE UK Index Series are also available, outlining changes to the index's rules and methodology over time. This 276.8KB PDF is a useful resource for those interested in the index's evolution.

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If you're new to the FTSE 100, the UK Series Review FAQ - 2025 is a great place to start. This 131.7KB PDF answers common questions about the index and its constituent companies.

If you're interested in the companies that make up the FTSE 100, the FTSE 100 Adds and Deletes PDF provides a list of companies that have been added or deleted from the index over time. This 398.7KB PDF is a valuable resource for investors and researchers.

The UK Listing Regime and FTSE UK Index Series FAQ is another useful resource, providing answers to common questions about the index and the UK listing regime. This 233.4KB PDF is a great place to start for those new to the FTSE 100.

The FTSE 250 index has been around for over three decades, as highlighted in The FTSE 250 index enters its fourth decade PDF. This 19.0MB PDF provides a detailed look at the index's history and evolution.

Here are some key resources for the FTSE 100 Index:

The FTSE UK ESG Risk-Adjusted Index Series is designed to reflect the performance of UK stocks while improving broad ESG characteristics.

These indexes are based on the FTSE UK Index Series, which means they maintain similar risk/return characteristics to the underlying universe.

The FTSE4Good Index Series measures the performance of companies demonstrating strong ESG practices, applying exclusions to ensure only the best performers are included.

Investors can use the FTSE Global Choice index Series to align their portfolios with their individual values, as it excludes constituents with controversial conduct and controversial weapons.

The FTSE 100 index was launched on January 3, 1984.

The index accounts for around 80% of the market cap of the London Stock Exchange.

The index is reviewed quarterly, so the companies included can change every three months.

To be included in the FTSE 100 index, a company must be a public limited firm listed on the London Stock Exchange.

For more insights, see: London Stock Exchange Group

The FTSE 100 is a free-float capitalization-weighted index, meaning it only considers shares that are freely available for trading.

The index's value can be affected by global economic and political events, as seen in 1987 when a severe storm caused trading to halt.

The FTSE 100 index hit an all-time high of 7,877.45 on May 22, 2018.

The index was also affected by the dot com boom, reaching a new record high of 6930.2 points on December 30, 1999.

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