FTSE 100 Index

FTSE 100 Index
Name	FTSE 100 Index
Foundation	03 January 1984
Operator	FTSE Russell
Exchange	London Stock Exchange
Constituents	100
Related indices	FTSE 250, FTSE 350
Website	https://www.londonstockexchange.com/indices/ftse-100

FTSE 100 Index. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalisation. It is seen as a gauge of prosperity for businesses regulated by UK company law and is the leading share index in Europe. The index is maintained by FTSE Russell, a subsidiary of the London Stock Exchange Group.

Overview

The index serves as the primary benchmark for the United Kingdom's equity market, representing approximately 80% of the total market capitalisation of the London Stock Exchange. It is a key indicator for international investors assessing the health of the British economy and is quoted alongside other major global indices like the S&P 500 and the Nikkei 225. Constituents are drawn from a diverse range of sectors, including major firms in financial services, energy, and consumer goods. The performance of the index is closely watched by institutions such as the Bank of England and the Treasury.

History

The index was launched on 3 January 1984 with a base level of 1000, established by the Financial Times and the London Stock Exchange. Its creation provided a real-time, capitalisation-weighted measure of the London market, succeeding older indices like the FT 30. Significant milestones include its peak before the dot-com bubble and its sharp decline during the financial crisis of 2007–2008. The index has undergone numerous reconfigurations, reflecting major economic events like the Big Bang and the Brexit referendum, which caused high volatility. Historic lows were seen after events such as the Black Monday crash.

Composition and calculation

Constituents are reviewed quarterly by FTSE Russell based on market capitalisation rankings, with companies promoted from or demoted to the FTSE 250. The index is calculated in real-time using a free-float adjusted market capitalisation methodology. Major constituents have historically included multinational giants like HSBC, BP, and Unilever. The sector composition has shifted over time, with a reduced weighting for traditional industries like mining and increased representation from technology companies and consumer healthcare. The calculation system is designed to ensure continuity through events like rights issues and corporate actions.

Performance and records

The index reached its all-time closing high in February 2023, surpassing levels set before the COVID-19 pandemic. It experienced its largest one-day percentage fall on 20 October 1987, following Black Monday. Periods of sustained growth occurred during the 1990s and mid-2010s, while significant drawdowns coincided with the European debt crisis and the COVID-19 pandemic lockdowns. Long-term performance is often compared to other benchmarks like the DAX and the CAC 40. Records for annual gains were set in the late 1990s, driven by the technology bubble.

Investment products

A wide array of financial products are linked to the index, making it one of the world's most traded benchmarks. These include exchange-traded funds offered by firms like BlackRock's iShares and State Street's SPDRs, as well as futures and options traded on ICE Futures Europe. Many pension funds and investment trusts in the United Kingdom use it as a performance reference. Major derivatives are cleared through LCH.Clearnet. The index also underpins structured products issued by global banks like Barclays and Société Générale.

Criticism and controversies

Critics argue the index is not fully representative of the British economy, as many constituents generate most of their revenue overseas, in regions like North America and Asia. This global focus can decouple its performance from domestic economic indicators monitored by the Office for National Statistics. The index has also faced scrutiny over the environmental, social, and corporate governance records of some constituents, with pressure from groups like Climate Action 100+. Periodic controversies involve the weighting of sectors like fossil fuels and the inclusion of companies embroiled in scandals, such as those related to the Libor affair.

Category:FTSE Group Category:Stock market indices of the United Kingdom Category:1984 establishments in the United Kingdom