FTSE 100: What’s the deal?
You’ve probably heard of the FTSE 100...
It’s the big name in UK stocks, popping up in the news whenever the market takes a leap (or a tumble). But what actually is it, and why should you care? Let’s break it down.
What is the FTSE 100?
Think of the FTSE 100 as the Premier League of UK businesses – the 100 biggest companies trading on the London Stock Exchange. If the stock market is having a good (or bad) day, chances are, the FTSE 100 is leading the charge.
And that name? ‘FTSE’ originally stood for ‘Financial Times’ and ‘Stock Exchange’, the two companies that kicked it off in 1984. These days, it’s owned by the London Stock Exchange under the FTSE Russell brand.
Who’s in the FTSE 100?
You’ll definitely know some of these giants – like AstraZeneca (medicine mogul), Shell (oil heavyweight), and Unilever (home to everything from ice cream to deodorant).
The FTSE 100 is a mix of industries, including energy, finance, healthcare, and consumer goods. But here’s a fun fact: compared to the US stock market, there aren’t many big tech companies in the FTSE 100. That might change in the future, but for now, it’s packed with steady, well-established businesses that often pay solid dividends.
How does the FTSE 100 work?
Every three months, the list gets a shake-up. FTSE Russell checks which companies still make the cut and updates the rankings:
- Moving up – If a company in the FTSE 250 (the next biggest 250 companies) grows enough, it gets promoted to the FTSE 100.
- Dropping out – If a FTSE 100 company falls in value, it can get kicked off the list.
This reshuffle happens in March, June, September, and December – keeping things fresh and making sure the index reflects the UK’s biggest businesses.
How can you invest in the FTSE 100?
- Tracker funds – These follow the FTSE 100’s ups and downs, so you’re automatically invested in all 100 companies (like Dodl’s “UK top 100” fund).
- ETFs (exchange-traded funds) – Similar to tracker funds, but you can buy and sell them like regular shares.
- Shares – Fancy a specific company? You can buy individual FTSE 100 stocks directly.
Why does the FTSE 100 matter?
The FTSE 100 isn’t just a list – it’s the measure of the UK stock market’s health. It’s our answer to the S&P 500 in the US or Japan’s Nikkei 225. It’s also a huge deal for investors. Many pension funds and savings plans invest in FTSE 100 stocks because these companies are (mostly) reliable and often pay dividends.
And for businesses? Making it into the FTSE 100 is like earning a gold star – it’s a sign they’re one of the UK’s biggest and most successful companies. So, next time you hear someone mention the FTSE 100, you’ll know exactly what they’re on about – and why it’s such a big deal!
Want a piece of the action? With Dodl, investing in the FTSE 100 is super simple – plus, you can explore a wide range of other funds and shares, all from the app.
🔔 Always remember, the value of your investments can go down as well as up. Dodl doesn’t give financial advice, but we do hope the info is helpful!