FTSE 100 Index: What It Is and Why It Matters

Understanding the FTSE 100 Index

The FTSE 100 Index, also known as the "Footsie," is a stock market index that tracks the performance of the 100 largest companies listed on the London Stock Exchange.

The FTSE 100 is a capitalization-weighted index, meaning the companies with the largest market capitalizations have the greatest impact on its value.

The index plays a prominent role in global finance and is widely followed by investors, traders, and economists to gauge overall market performance.

FTSE 100 Constituents

The FTSE 100 constituents are reviewed quarterly by the FTSE Russell, an independent provider of global index data.

Companies are included or excluded based on specific criteria, including their market capitalization, free float, and industry classification.

Quarterly reviews can lead to significant changes in the composition of the index, affecting share prices and creating a period of heightened trading activity.

FTSE 100 Performance and Significance

The FTSE 100 Index has a long history, dating back to 1984 when it was launched with a base value of 1,000.

Since then, the index has experienced significant growth and fluctuations, mirroring the overall health of the UK economy and global markets.

The index provides valuable insights into market trends, economic performance, and investment strategies, serving as a benchmark for investors worldwide.

Conclusion

The FTSE 100 Index is a crucial indicator of the health of the UK stock market and a valuable tool for investors and financial professionals.

Its quarterly reviews and dynamic nature make it an essential source of information for those seeking to understand market trends and make informed investment decisions.