What is the FTSE 100?

What is the FTSE 100?

The FTSE 100 (often pronounced "Footsie one hundred") is a stock market index that tracks the 100 largest companies listed on the London Stock Exchange (LSE) by market capitalisation. Market capitalisation, or market cap, simply means the total value of a company's shares. The bigger the company, the bigger its presence in the index.

FTSE stands for Financial Times Stock Exchange, a reference to the partnership between the Financial Times newspaper and the London Stock Exchange that originally created it. Today it is managed by FTSE Russell, a global index provider.

The index was launched on 3 January 1984 with a base value of 1,000 points. Since then it has become the primary benchmark for the UK stock market, in the same way that the S&P 500 is used to represent the US market, or the Nikkei 225 represents Japan. When a news presenter says "the markets rose today," in a UK context they almost always mean the FTSE 100 moved upwards.

How does it work?

The FTSE 100 is a market-cap weighted index. This means the larger a company is, the more influence it has over the index's overall level. Shell and AstraZeneca, for example, each represent a far greater share of the index than a smaller constituent like Burberry or Entain. When a giant company's share price moves, it has a noticeably larger effect on the index number than when a smaller company moves by the same percentage.

The index is calculated in real time during market hours, running from 8am to 4:30pm on weekdays, excluding bank holidays. Every time a share price changes for any of the 100 constituent companies, the index level updates automatically to reflect the new combined market value.

How do companies get in, or get out?

FTSE Russell reviews the composition of the FTSE 100 every quarter, in March, June, September, and December. If a company's market cap has grown large enough to push it into the top 90 of all LSE-listed companies, it is promoted into the FTSE 100. If a company falls below 111th place, it is relegated, typically dropping into the FTSE 250, which is the next tier down covering the following 250 companies by size.

This is sometimes described as a promotion and relegation system, much like the football leagues. It happens more than you might expect. A company can enter the FTSE 100 during a period of strong growth and leave again within a couple of years if its value falls. Companies like Marks & Spencer, Rolls-Royce, and Ocado have all experienced moves in and out of the index over the years.

Which companies are in it?

The FTSE 100 includes some of the most recognisable names in British business, alongside some that are listed in London but operate almost entirely on the global stage. Here is a sample of well-known constituents as of 2026, grouped by sector.

One thing worth knowing is that many FTSE 100 companies are not really "British" in the way people assume. Shell, HSBC, and Rio Tinto, for example, earn the vast majority of their revenue outside the UK. This means the FTSE 100's performance is often more tied to global economic conditions and currency movements than to what is happening specifically in the British economy.

What sectors make up the FTSE 100?

The FTSE 100 is not evenly spread across all industries. It has historically been heavily weighted towards a handful of sectors, particularly financials, energy, and consumer staples. This is quite different from the US market, which is dominated by technology companies.

Understanding this mix matters because it affects how the index behaves in different economic conditions. A FTSE 100 tracker is essentially a bet on financial services, oil and gas, mining, and pharmaceuticals, not on the kind of high-growth technology companies that drove US market returns in the 2010s and early 2020s.

The lack of large technology companies is often cited as a reason why the FTSE 100 has historically underperformed compared to the US S&P 500 over the past decade. The index does not contain any company equivalent to Apple, Nvidia, or Amazon. The UK's technology sector is growing, but it remains a relatively small portion of the overall index.

What the FTSE 100 does have, in relative abundance, is high-dividend companies. Sectors like energy, financials, and consumer staples tend to pay out a higher proportion of their profits as dividends to shareholders. This makes the FTSE 100 popular with income-focused investors who want regular cash payments from their holdings.

How has the FTSE 100 performed over time?

The FTSE 100 started at 1,000 points in January 1984. Its journey since then has been anything but a straight line. It has lived through the Black Monday crash of 1987, the dot-com bubble bursting in 2000, the global financial crisis of 2008, the Brexit referendum of 2016, and the pandemic-driven collapse of early 2020.

It first broke through the 7,000 mark in March 2015 and, after years of grinding, pushed past 8,000 in early 2023. The key thing to understand about any long-term index chart is that the periods of sharp decline, as dramatic as they look in the moment, have consistently been followed by recoveries, often to new highs.

Use the calculator below to model what a regular monthly investment into a FTSE 100 tracker might have grown to over different time periods, using historical average return assumptions.

The dividend reinvestment slider is worth paying attention to. The FTSE 100 has historically offered a dividend yield of around 3.5% to 4% per year, one of the highest of any major global index. When those dividends are reinvested automatically (as happens inside an accumulating ETF), they compound over time and can account for a very significant portion of total returns.

FTSE 100 vs the S&P 500

This is one of the most common questions beginners ask, and it is a fair one. Both are major stock market indices, but they represent very different things.

Neither is inherently better than the other. They are just different. Many UK investors choose to invest in both, either by holding a FTSE 100 ETF and a US market ETF separately, or by simply buying a global index ETF that includes both in proportion to their market size. A global fund naturally gives you around 60% exposure to the US and around 4% to UK large-caps, reflecting where the world's market value actually sits.

How to invest in the FTSE 100

You cannot buy the FTSE 100 directly because it is an index, not a product. What you can do is invest in a fund or ETF that tracks it, meaning your money mirrors the performance of the index as closely as possible.

1. 1

   Open a Stocks and Shares ISA or general investment account

   For most UK investors, a Stocks and Shares ISA is the best starting point because any gains and dividends are sheltered from UK tax. Platforms like Vanguard, InvestEngine, Hargreaves Lansdown, and Trading 212 all offer access to FTSE 100 trackers.

2. 2

   Find a FTSE 100 index fund or ETF

   Search for "FTSE 100" in your platform's fund search. Popular low-cost options include the iShares Core FTSE 100 ETF (ticker: ISF) and the Vanguard FTSE 100 Index Unit Trust. Check the Ongoing Charge Figure (OCF). For a straightforward FTSE 100 tracker, anything above 0.20% per year is higher than necessary.

3. 3

   Decide between accumulating and distributing

   An accumulating fund reinvests dividends automatically, growing your pot without you having to do anything. A distributing fund pays dividends into your account as cash. Inside an ISA, both are tax-free, so the choice mainly comes down to whether you want the income now or prefer to let it compound.

4. 4

   Invest regularly if you can

   Setting up a monthly direct debit to invest a fixed amount (sometimes called pound-cost averaging) means you buy more units when the FTSE 100 is lower and fewer when it is higher. Over time this smooths out the impact of short-term volatility and removes the temptation to time the market.

5. 5

   Think about whether the FTSE 100 alone is enough

   A FTSE 100 tracker gives you excellent exposure to large UK-listed companies, but the index is concentrated in a handful of sectors and has limited technology exposure. Many investors pair it with a global index fund, or simply use a global fund from the start, to get broader diversification across geographies and industries.

Frequently asked questions