Playing Footsie

What is the FTSE?

or FTSE - What's in a name?

It is pronounced ‘footsie’ or for fans of phonetics: /ˈfʊtsiː/
The FTSE isn’t one thing. The name derives from the acronym of its two parent companies, The Financial Times and the London Stock Exchange, but has since been registered as a company in its own right.

The London Stock Exchange has a market capitalization of over $3.5 trillion.
Based on this measure it is the 4th largest exchange in the world.

There are, in fact, a number of indices, many of which are famous – such as the FTSE100 and the FTSE AllShare. Some though, are not so well known.


Following is a brief description of each



FTSE100

Arguably the most famous of the FTSE indices, the FTSE100 started in 1984 with a base level of 1,000

Newspapers overnight (5th August 2011) were telling how the FTSE100 fell yesterday to 5,300. The lowest it has been in the last year is 5,070 with the 12 month high 6,105

This index simply consists of the 100 largest companies (by capitalisation) in the UK. It represents about 80% of the entire UK market.

The top 5 UK shares themselves represent almost 30% of the FTSE100

The top 10 UK shares represent almost 50% of the FTSE100

(have a look at yesterday's blog post for the top 10 rundown and a few FTSE100 fun facts and figures)

The FTSE100 high is when it almost reached 7,000 – hitting 6,950 on 30 December 1999

After the so called credit crunch and economic meltdown in 2007-2010 it fell back below 3,500

In more recent times it has been bobbling around the 6,000 mark in 2011 yet was as low as just over 5,000 in the last 12 months (see above)



FTSE250

known as mid caps

The next 250 largest (after the first 100) companies in the UK

This index is about 15% of the total market by capitalization



FTSE SmallCap

This index gives values to companies not deemed large enough to be included in the 350 stocks that make up the FTSE 100 and FTSE250

There are a number of shares available that rarely trade and these are screened out of the index.

It tracks around 300+ shares – and most investors could trade in as many shares (or as great a volume) in these as they wished.

It represents about 2% of the market.

Two versions are available – one that includes investment trusts and one that doesn’t



FTSE Fledgling

Very small companies!

Too small in fact, to be included in the FTSE AllShare (see below)



FTSE All Small

Combining the FTSE Smallcap and FTSE Fledgling with around 525+ stocks making up this index – but they represent less than 4% of the total market. Like the Smallcap, two versions exist, with and without Investment Trusts



FTSE 350

As the name indicates, it consists of the companies in the FTSE100 and FTSE250.

This amounts to just over 95% of the total market

The content could be considered as the most actively traded large and medium sized companies in the UK



FTSE Allshare

This index has been in existence since 1962

It covers all 3 segments of the UK market – large, medium and small
Many would say that if your aim is to invest in the UK markets as a whole in order to follow market sentiment then this is the index to follow, rather than the more popular FTSE100
But as the FTSE100 steals the headlines on news bulletins and is a badge of honour for those listed in it,  the FTSE AllShare remains the lesser known index.



FT30

Avid blog readers and attendees of my estate planning seminars will already be aware of this little known index. Much like it’s more familiar and ancient cousin from across the pond, the Dow, this index has a relatively small number of companies – 30 if you hadn’t already guessed. It consists of what are known as ‘blue-chip’ stocks.

Although rarely referred to today, it is the oldest continuous index of shares in the UK, having started life in 1935 – this also makes it one of the older indexes world wide

 
I hope you have enjoyed this little game of footsie.