Ftse 100 Companies

The FTSE 100: What does all this mean?

Simply, but with few exceptions, the FTSE 100 is an index composed of the 100 largest companies listed on the London Stock Exchange (LSE). They are often referred to as blue chip companies, and the index is traditionally considered a good indicator of the performance of large listed companies in the United Kingdom.

The FTSE 100 is named after the company that calculates the FTSE index, and the fact that it contains 100 companies. FTSE FTSE Group is made, and is owned 50/50 by the Financial Times and the London Stock Exchange (FTSE therefore - FT and SE). Although the FTSE 100 Index is the most famous, the company produces, FTSE Group calculates over 100,000 also other indices, covering markets around the world every day.

In the UK market, other British FTSE, including the FTSE 250 (the 250 largest companies after the FTSE 100) and the FTSE SmallCap (companies smaller than them). The FTSE 100 and FTSE 250 FTSE 350 together form, add in the FTSE SmallCap and you get the FTSE-All Share.

The FTSE 100 was launched January 3, 1984 and had a start value of 1000.0. Since then, the composition of the index has changed almost beyond recognition - Mergers, acquisitions, companies that are closing are all meant the index was only 21 of the original components left by underlining indexes in order to act as a barometer of market activity. A good number of voters have changed their names too remember Midland Bank (HSBC), Commercial Union Insurance (Aviva), Reckitt & Colman (Reckitt Benckiser) and British Gas (BG Group and Centrica now).

Of course, the index must be changed to make sure it still reflects the 100 largest companies listed on the London Stock Exchange if it wasn't, we would still contain an index of companies such as Trafalgar House and Rowntree Mackintosh. These changes occur once a quarter, but if there are takeovers or mergers between these times affecting companies in the FTSE 100 index will be modified accordingly. The process of revising the index is simple all companies listed on the London Stock Exchange and eligible for the FTSE UK are listed in order of their size or market capitalization (calculated by multiplying the number of issued shares a company and the current price of the share).

A committee composed of independent experts of the market meets in March, June, September and December, and believes that companies should be allowed to enter the FTSE 100. Simply, if a company is in the FTSE 250 climbs in the first 90 companies, it can enter the FTSE 100. If a FTSE 100 company falls to 111th or below in the standings, he will fall in the FTSE 250. It is not just a matter of choosing the 100 largest companies and draw a line in a band system is in place.

These bands exist so there is not too many changes to reviewing each of the index must be stable enough for investors not to be excessive and costly changes to their portfolios. In some cases, no change in the FTSE 100 were made at an examination, but during the dot com boom, the market activity means that many companies could enter and leave the index when changes have made. The changes in each quarterly review are often covered by journalists in market affairs sections of the national press.

The figure seen on the evening news is, in fact, the closing value of the FTSE 100. The index is calculated every 15 seconds on each weekday (excluding public holidays in the United Kingdom), from 8 am (open market) until 4:30 in the afternoon (closed market).

The level of the FTSE 100 affects most people in the United Kingdom, even if they do not invest directly for themselves: as pension fund holders whose investments are probably invested in shares of UK how the index is a direct impact on the return they receive.

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