FTSE 100 definition
The FTSE 100 – an index of the UK’s largest 100 public companies by market capitalization – has become a popular way to gain exposure to the UK stock market and track the performance of the country’s economic health. The FTSE 100 index was created in 1984. The 100 blue chips selected are reviewed quarterly and makeup over three-quarters of the total market capitalization on the London Stock Exchange.
What does FTSE stand for?
The name itself, FTSE, is a combination of the two founding organizations which still maintain the index today as an independent company – the Financial Times and the London Stock Exchange.
How is FTSE 100 calculated?
Size is measured by market capitalization. That’s the value of all the shares added together. The larger the market capitalization the bigger its percentage of the index. The level of the FTSE 100 is calculated using the total market capitalization of the constituent companies (and the index value) to produce the single figure you see quoted.
Because the total market capitalization is affected by the individual share prices of the companies, as share prices change throughout the day, so the index value changes. The change is calculated when FTSE 100 is up or down against the previous day’s close. The index is actually calculated continuously on every weekday (excluding UK public holidays), from 8:00 (market opening) until 16.30 in the afternoon (market close).