The Ftse 100 Index - Footsie 100
London
Stock Market
The
Ftse 100 Index
The
Ftse100
or Footsie 100
is one of the
leading benchmark indicators of the London
Stock Market. It
is an index that
measures the performance of
the largest 100 shares listed on the London Stock Exchange and its
constituents include
some of the worlds best known companies such as HSBC, Bp,
Vodafone, British and American Tobacco, etc...
The
Ftse100 index accounts for
more than 80% of the entire domestic market
and is one of
the worlds primary stock market indexes. Created in 1984, the Ftse
today represents between 7-8% of the capitalization of global equity
markets.
What Does FTSE
Stand For
What does
FTSE stand for? Ever
wondered 'what does Ftse mean'?
Well,
to put you out of your misery, here it is. It is simply an acronym, an
abbreviation taken from the names of the joint owners of the FTSE
Group which is an independent company that create and
manage the
Ftse indices.....the Financial Times and the London Stock Exchange -
FTSE.
FTSE
International LTD have created and manage 120,000 indices worldwide.
What is the
Ftse 100 Used For
In addition to trading
the
Ftse100 index itself, because
the Footsie 100
accounts for such a large proportion of the domestic
share market, the Footsie indexes are widely used by all sections of
the financial
services, individual traders and investors, and the media as a
barometer of the health of the British stock market and to a large
extent, a barometer of the health of the world stock market too.
More specifically, the Footsie is used by Fund managers, Traders and
Investors in a number of ways...
- Measurement
of performance -
Traders and Investors can gauge which funds to invest in by comparing
their performances to the performance of the wider market in general.
eg: The Ftse 100 may be up 5% in a year, a fund may have out performed
the market and be up 20%.
- Hedging
a portfolio -
A position can be taken on the Ftse100 to hedge a long term investment
portfolio against a falling market.
- Creating
Investment Funds -
Funds can be created to track the movements of the Footsie 100 to give
investors an option to diversify their portfolio by tracking the
performance of the wider market as an alternative to investing in
shares of the individual Footsie 100 constituents.
|
Learn
about Trading the Footsie Tax Free*** |
| Trading the
Footsie 100 Index with Financial Spread Betting
|
*** Tax Law can change and
may differ in other jurisdictions
outside the UK
Who Decides What Stocks go into
the FTSE 100
The
Footsie
100 is an index of the largest 100 companies by
capitalization
listed on the London
Stock Exchange. The list of Ftse 100 constituents
is reviewed quarterly and companies that have seen their share market
capitalization fall may be replaced by the ones that have seen their
capitalization raised up into the top 100, providing they meet the
indexes rules.
Inclusion into the Footsie100
is very
prestigious and can lead to a boost for shareholders of a company as
the indexes funds and trackers may have to increase their shareholding
to maintain their balance and their ability to mirror the indexes
movements when a new company is admitted in to it. Conversely the
outgoing companies can see a drop in value as their shares are
offloaded.
Share prices
can seem to contradict this as investors
preempt the move and position themselves ahead of the official
announcement.
The quarterly reviews are conducted by
Independent committees of experts are who ultimately decide which
stocks are included and which ones are dropped.
Ftse
100 Trading
Can the
Footsie
100 be traded? Ftse
100 trading is an increasingly popular option for any investor who may
want to spread risk. Trading the share market index itself can help to
protect a portfolio from the risks associated with investing in
individual stocks where an unexpected event could be disastrous for any
stocks share price, however solid the investment may
appear to be.
The Ftse
100 index
can be traded in a number of ways - Learn more about Ftse
100 Index Trading
or
find out How to trade the
Footsie 100 with CFDs Trading at Capital Spreads.
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