What Is Financial Times Stock Exchange Group—FTSE?
The Financial Times Stock Exchange Group (FTSE), also known by the nickname of “Footsie,” is an independent organization. It is similar to the Standard & Poor’s, which specializes in creating index offerings for the global financial markets. An index will represent a market segment and is a hypothetical portfolio of stock holdings. The most well-known index, among many at FTSE, is the FTSE 100, which is composed of blue-chip stocks listed on the London Stock Exchange.
The London Stock Exchange Group (LSEG) owns the FTSE Group. LSEG is a London-based parent organization which also owns Russell Indexes, Borsa Italiana, MilenniumIT and other financial organizations. In May 2015, LSEG announced the combination of FTSE Group and Russell forming the brand name FTSE Russell.
- FTSE Group is an entity that specializes in creating index offerings for the global financial markets.
- The London Stock Exchange Group owns FTSE.
- In May 2015 FTSE Group combined with Russell to form the brand name, FTSE Russell.
- The FTSE 100 is generally the most well known FTSE index, but the FTSE Group manages hundreds of indexes.
FTSE 100 as Part of the FTSE Group
Market analysts, traders, and investors will follow the FTSE indices. Perhaps, the two most popular of the many indexes FTSE Russell oversees is the FTSE 100 and the Russell 2000. The FTSE 100 is arguably the most popular and widely used stock market index in Europe. At its creation in January 1984, the index had a base level of 1,000. As of February 2019, it had a level of over 7,000.
Examples for FTSE 100 Investing
The FTSE 100 includes the largest 100 companies which list on the LSE and represents about 80% of the total market capitalization of the exchange. FTSE 100 is a market-cap weighted index. Market-cap weighting means individual stocks which have a higher market capitalization represent a correspondingly higher weight in the index. The FTSE Group manages the FTSE 100 which uses real-time calculations for its value. The index updates and publishes every 15 seconds.
Readjustment of the index constituents, or companies which make up the FTSE 100, happens every quarter, usually the Wednesday following the first Friday in March, June, September, and December. Any changes to the underlying index constituents and their weighting comes from the values of the companies taken at the close of business the night before the review.
As of February 2019, the top four holdings by market cap were:
- (RDSB.L) ROYAL DUTCH SHELL PLC B
- (RDSA.L) ROYAL DUTCH SHELL PLC-A
- (HSBA.L) HSBC HOLDINGS PLC
- (BP.L) BP PLC
The FTSE 100 is often considered a leading indicator of prosperity for the United Kingdom (UK) companies and the UK economy in general. As such it typically draws investors looking for exposure to big UK companies. While several of its listings do include companies with homes outside of the UK, it is most significantly made up of UK companies and impacted by UK daily developments.
Other FTSE Group Indexes
As mentioned, there are a prolific number of indexes attached to the FTSE Group and the FTSE Russell brand. The FTSE Group's most popular index in addition to the FTSE 100 is the FTSE 250, the FTSE 350 and the FTSE All-Share. All four of these indexes have index fund offerings in the Vanguard FTSE 100 (VUKE), Vanguard FTSE 250 (VMID), the iShares 350 UK Equity Index Fund and the Vanguard FTSE UK All Share Index Unit Trust.
Some of the other popular FTSE Russell indices include:
- FTSE Nasdaq 500
- FTSE AIM 100
- FTSE Dividend Growth
- Russell Top 200
- Russell 2000
- Russell Equal Weight
- Russell Geographic Exposure
Real World Example
As mentioned earlier, the FTSE 100 is a market-cap weighted index. Companies near the top of the market cap list often attract the most attention. As an example, consider the impact of BP PLC (BP.L) on the index. According to The Irish Independent, BP which ranks fourth in market cap reported a strong fourth-quarter earnings report which helped to lift its stock price nearly 1% while the value of the FTSE 100 climbed almost 2% on February 5, 2019.