span smaller than those). The FTSE 100
class="cap">S imply, and FTSE 250 together make up the
but with a few exceptions, FTSE 350; add in the FTSE
the FTSE 100 is an index composed SmallCap and you get the FTSE
of the 100 largest companies All-Share.
listed on the London Stock
The FTSE 100 was launched on 3
Exchange (LSE). These are often January 1984 and had a start
referred to as blue chip value of 1,000.0. Since then the
companies, and the index is seen make-up of the index has changed
traditionally as a good almost beyond recognition -
indication of the performance of mergers, takeovers and
major companies listed in the UK. disappearing companies have all
The FTSE 100 gets its name from meant the index only has 21 of
FTSE the company which calculates the original constituents left in
the index, and the fact that it it underlining the indexs purpose
contains 100 companies. FTSE is of acting as a barometer of
actually FTSE Group, and is 50/50 market activity. A fair number of
owned by the Financial Times and constituents have changed their
the London Stock Exchange (hence names too remember Midland Bank
FTSE - FT and SE). Although the (HSBC), Commercial Union
FTSE 100 is the most famous index Assurance (Aviva), Reckitt &
the company produces, FTSE Group Colman (Reckitt Benckiser) and
also calculates over 100,000 British Gas (now BG Group and
other indices, covering markets Centrica).
around the world, every day.
Of course, the index must be
In the UK market, the other changed to make sure it still
FTSE UK indices include the FTSE reflects the top 100 companies
250 (the next 250 largest listed on the LSE if it wasnt, we
companies after the FTSE 100) and would still have an index
the FTSE SmallCap (the companies containing companies such as
Trafalgar House and Rowntree case of picking the largest 100
Mackintosh. These changes happen companies and drawing a line a
once a quarter, although if there banding system is in place.
are takeovers or mergers in
These bands exist so there are
between these times affecting not too many changes at each
companies in the FTSE 100, the review the index needs to be kept
index will be changed fairly stable for investors not
accordingly. The process for to have excessive and expensive
reviewing the index is changes to make to their
straightforward all companies portfolios. On some occasions, no
listed on the LSE and eligible changes to the FTSE 100 have been
for the FTSE UK indices are made at a review, but during the
ranked in order of their size, or dot com boom, market activity
market capitalisation (calculated meant that large numbers of
by multiplying the number of companies could enter and leave
issued shares of a company and the index when changes were made.
the current share price).
The changes made at each
A committee made up of quarterly review are often
independent market experts meets covered by market reporters in
in March, June, September and the business sections of the
December and considers which national press.
companies should be allowed into
The figure seen on the evening
the FTSE 100. Simply, if a news is, in fact, the closing
company is in the FTSE 250 and value of the FTSE 100. The index
climbs into the top 90 companies, is actually calculated every 15
it can enter the FTSE 100. If a seconds on every week day
FTSE 100 company falls to 111th (excluding UK public holidays),
position or below in the from 8 in the morning (market
rankings, it will fall into the opening) until 4.30 in the
FTSE 250. So it is not just a afternoon (market close).
The level of the FTSE 100 operate as not enough market
affects most people in the UK practitioners made it in to work
even if they dont directly invest to open share prices on the
for themselves: as pension fund London Stock Exchange trading
holders whose investments are system!
probably invested in UK equities,
how well the index is performing
occurred when the markets fell in align="center">
China. The largest one-day
percentage fall was on 20 October 1987 at 12.22%; this was the day type="text/javascript">
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Article Tags: 100, ftse, index
