The FTSE 100 Index
The FTSE 100 Index, also known as the Financial Times Stock Exchange 100 Index, is a market capitalization-weighted index of the 100 largest companies listed on the London Stock Exchange. It is considered to be a barometer of the overall health of the UK stock market and is one of the most widely followed equity indices in the world.
Components of the FTSE 100
The FTSE 100 Index consists of companies from various sectors including finance, healthcare, energy, and consumer goods. Some of the largest constituents of the index include companies like BP, HSBC Holdings, Unilever, and GlaxoSmithKline. The constituents of the index are reviewed quarterly to ensure they continue to meet the eligibility criteria.
Calculating the FTSE 100 Index
The value of the FTSE 100 Index is calculated by taking the sum of the market capitalization of all the companies in the index and then applying a free-float adjustment factor to account for shares that are not readily available for trading. The index is then adjusted to reflect corporate actions such as stock splits, mergers, and acquisitions.
Importance of the FTSE 100 Index
Due to its composition of large, established companies, the FTSE 100 Index is often used by investors as a benchmark for the performance of their portfolios. It is also used by fund managers as a basis for creating index funds that track the performance of the index. Changes in the FTSE 100 Index can have a significant impact on investor sentiment and overall market trends.
