The FTSE 100, short for the Financial Times Stock Exchange 100 index and often called the ‘Footsie’, is a stock market index that represents the 100 largest companies listed on the London Stock Exchange (LSE) by market capitalisation. The index is widely regarded as the benchmark indicator of the performance of major UK companies and the UK stock market. It includes companies from various sectors, reflecting the diversity of the UK economy, including finance, oil & gas, pharmaceuticals, consumer goods and technology. The composition of the FTSE 100 changes periodically based on the market cap of companies, ensuring it always represents the highest-valued companies in the UK.
It is used by investors around the world to gauge the health of the UK economy and as a basis for investment decisions. Many investment funds and exchange-traded funds (ETFs) use the FTSE 100 as a benchmark, offering investors exposure to the UK's largest and most liquid companies. The index's movements are influenced by economic data, political events and global market trends, making it a vital tool for investors looking to understand market sentiment and potential investment opportunities in the UK.
For individual investors, the FTSE 100 provides a snapshot of the market's performance and trends in various sectors. Investing in companies within the FTSE 100 or in funds that track the index can offer diversification, as well as the potential for growth and income through dividends paid by the companies. However, like all investments, those in the FTSE 100 carry risks, including market volatility and currency risk for international investors. Understanding the factors that influence the performance of the FTSE 100 and the individual companies within it is crucial for making informed investment decisions.
This Trustnet Learn article was written with assistance from artificial intelligence (AI). For more information, please visit our AI Statement.