What Is the FTSE 100?

The FTSE 100, also known as the Footsie, is a benchmark stock index comprising the 100 largest companies by market capitalisation on the London Stock Exchange (LSE).

This benchmark index is a gauge of the state of the United Kingdom’s economy and business sector, as it tracks the performance of the country’s most valuable companies.

Introducing the FTSE 100 index

The entity that manages and owns the FTSE 100 index is the research group FTSE Russell, a wholly-owned subsidiary of the London Stock Exchange Group (LSEG).

Along with the FTSE 100, the FTSE Group oversees many other equity benchmarks that track the performance of securities listed on the LSE, including companies of different sizes and industries. Indices from the same family include the FTSE 250 Index, FTSE 350 Index, FTSE SmallCap Index, and FTSE All-Share Index.

The value of the FTSE 100 index (expressed in points) is calculated and published in real-time throughout the trading day.

How does the FTSE 100 work?

Rather than using full market capitalisation, the FTSE 100 weightings take into account the free-float adjusted market capitalisation of its constituent companies.

The free-float adjustment considers only the number of shares available for public trading (“free float”) rather than all shares outstanding, including those held by insiders or strategic investors.

This means that the only the publicly available shares rather than the full theoretical market value have an impact on the stock’s price movement.

FTSE Russell reviews the index quarterly to determine if any adjustments are necessary to its composition and weightings to reflect changes in the market caps of LSE-listed companies.

As of November 2025, the five largest constituents of the FTSE 100 index by weight are:

• HSBC Holdings 7.99%
• AstraZeneca 7.37%
• Shell 6.84%
• Unilever 4.67%
• Rolls-Royce 4.44%

At the same time, the FTSE Russell website reports that the dividend yield of the index stood at 3.16% at the end of November 2025.

Sectors in the FTSE 100

One of the key characteristics of the FTSE 100 is that it provides exposure to a wide range of industries, sectors, and segments of the UK economy.

The largest sectors by weight in the index include:

Other sectors with notable weightings in the index include Food, Beverage and Tobacco, Financial Services, Basic Resources, and Utilities.

What does the FTSE 100’s value tell us?

Unlike stocks, the FTSE 100 does not have a share price measured in currency terms.

Rather, its level is quoted as an index value represented by a number of points that reflect the overall performance of its components based on their individual market capitalisations and share prices.

For example, if the FTSE 100 is at 7,500 points, this does not mean that the aggregate share prices of all constituents add up to £ 7,500.

The points are simply a numerical representation of the value of the index derived from the performance of its constituents based on a unique methodology.

The method of calculation

The FTSE 100 uses an arithmetic mean share-weighting calculation methodology. The process of computing the index’s value is as follows:

The divisor is adjusted over time to maintain continuity in the index whenever there are changes due to corporate events, such as mergers, acquisitions, delistings, etc. This allows for consistent historical comparisons of the index level

How to trade the FTSE 100?

While investors cannot directly invest in or trade the FTSE 100 index itself, several popular products and investment vehicles track the index’s performance and provide exposure to its price movements.

This is a summary of some of the ways an investment portfolio can gain exposure to the wide selection of stocks included in the FTSE 100 index:

FTSE 100 Trading Hours

The stocks of the companies that make up the FTSE 100 index trade on the London Stock Exchange from 8:00 a.m. to 4:30 p.m. London time on weekdays, excluding holidays.

However, many derivative products that track the FTSE 100, such as futures, CFDs, and certain ETFs, are accessible outside of the LSE’s regular trading hours.

For example, FTSE 100 index futures trade nearly 24 hours a day if we consider the time zones of different regions – New York, London, and Singapore.

FTSE 100 pros and cons

Now that we have a clear definition of the FTSE 100, we should move on to the key benefits, advantages, and challenges associated with trading it compared to other indexes or individual UK equities.

Conclusion

The FTSE 100 works as a real-time indicator and credible barometer of the performance of the UK’s largest and most prominent publicly listed companies.

The diversity of its 100 constituents, which operate in different industries and economic sectors, provides an efficient way to gain diversified exposure to the UK equity market.

Although the index includes several large multinationals, it still serves as a reliable bellwether for the broader UK economy. The index provides a rich source of information about UK companies and the equity market.

High liquidity, track record, and wide availability of tradable products have solidified the FTSE 100 as one of the world’s most followed and analyzed stock indices.

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