What is the FTSE 100 index?
The FTSE 100 index tracks the 100 largest companies listed on the London Stock Exchange by market capitalisation. It is widely used as a benchmark for the UK stock market and reflects the performance of major global businesses. Learn more about the index, see how it's calculated, and discover the steps to trade it with IG. Interested in trading the FTSE 100 with us?
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What is the FTSE 100 in simple terms?
The FTSE 100 (or Financial Times Stock Exchange) is a stock market index that measures the performance of the 100 largest publicly listed companies in the UK.
The companies included in the index represent the biggest businesses trading on the London Stock Exchange. Together they account for a significant share of the total value of the UK stock market.
Because the index tracks these companies collectively, the FTSE 100 index is often used as a quick way to gauge the health of the UK equity market. When the index rises, it usually means the share prices of many of these companies have increased. When it falls, it suggests the opposite.
Many investors refer to the index simply as the “FTSE” or the “Footsie”.
What does FTSE stand for?
‘FTSE’ is short for ‘Financial Times Stock Exchange’, which is derived from the names of two companies that launched the FTSE – ‘Financial Times’ and ‘London Stock Exchange’. The ‘100’ in ‘FTSE 100’ represents the number of stocks in the index.
Quick facts about the FTSE 100
| Feature | Details |
| Full name | Financial Times Stock Exchange 100 Index |
| Country | United Kingdom |
| Number of companies | 100 |
| Exchange | London Stock Exchange |
| Weighting method | Market capitalisation weighted |
| Launch year | 1984 |
| Benchmark use | Indicator of UK stock market performance |
Trade or invest in the FTSE 100 with IG:
Which country does the FTSE 100 represent?
The FTSE 100 index represents the United Kingdom, but many of the companies included in the index operate globally.
In fact, around 75% of the revenue generated by FTSE 100 companies comes from outside the UK. Major multinational firms in the index earn income from markets across North America, Europe, Asia and emerging economies.
Because of this global exposure, the FTSE 100 is sometimes influenced by international economic trends rather than purely domestic UK conditions.
Quick fact
The FTSE 100 was launched in 1984 with a starting value of 1,000 points. Today it is one of the most widely followed stock market indices in Europe, and its value has risen to over 10,000 points.
Which companies are in the FTSE 100?
FTSE 100 companies are the largest businesses listed on the London Stock Exchange by market capitalisation.
These firms operate across a wide range of industries, including:
- Banking and financial services
- Energy and mining
- Pharmaceuticals and healthcare
- Consumer goods and retail
- Telecommunications
Well-known FTSE 100 companies have historically included global firms such as Shell, HSBC, AstraZeneca and Unilever. It is a dividends-focused index, making it a common diversification choice for US investors.
The exact composition of the FTSE 100 index changes over time. Companies can be added or removed during quarterly index reviews depending on their market value. FTSE Russell, a leading provider of index benchmarks and analytics, as well as a subsidiary of the LSEG, decides which companies are promoted or demoted (to the FTSE250).
These quarterly reviews result in huge price swings, with index tracker funds being required to rebalance their portfolios to match the new index composition, which in turn results in high trading volumes.
As of March 2026, IG is a proud member of the FTSE 100.
How the FTSE 100 index is calculated
The FTSE 100 index is calculated using a method known as market capitalisation weighting.
This means companies with larger market values have a bigger influence on the movement of the index.
For example:
- If a large company experiences a major share price movement, it can have a noticeable impact on the overall FTSE 100 level.
- Smaller companies within the index generally move the index less.
Market capitalisation is calculated by multiplying a company's share price by the number of shares available on the market.
Historical FTSE 100 returns
Over long periods, the FTSE 100 index has generally reflected the performance of large UK-listed companies and global economic trends.
Below is an example of how the index has performed across different time periods.
| Time period | Return trends* | Actual returns (excluding dividends)* |
| 1 year | Varies significantly depending on market conditions | 18% |
| 5 years | Historically moderate growth with periods of volatility | 54% |
| 10 years | Long-term gains influenced by global economic cycles | 133% (approx.) |
| Since launch (1984) | Substantial growth including reinvested dividends | 900+% |
*Returns vary depending on market conditions and whether dividends are included, and past performance is not an indicator of future returns.
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025* | Ten-year annualised return | |
| Total return with dividends reinvested (%) | 19.1 | 11.9 | -8.7 | 17.3 | -9.8 | 18.4 | 4.7 | 7.9 | 7.6 | 8.2 | 7.6 |
| Total return without dividends (%) | 14.4 | 7.6 | -12.5 | 8.9 | -14.3 | 14.3 | 0.9 | 3.8 | 3.8 | 6.0 | 3.0 |
The difference between the two rows reflects the impact of dividends paid by FTSE 100 companies. Many firms in the index distribute regular dividends, particularly in sectors such as energy, banking and consumer goods. As a result, the total return of the FTSE 100 with dividends reinvested has historically been higher than the price return alone.
Once again, past performance is not a reliable indicator of future results.
For investors looking to gain exposure to indices like this, there are several routes available including index funds, ETFs and derivative trading products.
You can learn more about trading or investing in the FTSE100 here.
What affects the FTSE 100?
Several factors influence movements in the FTSE 100 index.
Global economic conditions
Because many FTSE 100 companies operate internationally, global growth, trade conditions and commodity demand can affect the index.
Currency movements
The value of the British pound often impacts the FTSE 100. A weaker pound can sometimes benefit companies that earn revenue overseas. This is because when companies earn revenue in USD, this can then be converted to GBP and the profit reported in pounds. For this reason, the FTSE250 is a better indicator of the UK’s domestic economic health, as more revenue is earnt in the UK by companies in this index.
Commodity prices
Many firms in the FTSE100 operate in sectors such as oil, mining and natural resources. Changes in commodity prices can therefore influence index performance.
Interest rates and inflation
Decisions by central banks can affect borrowing costs, investment flows and market sentiment, which in turn may move the FTSE 100 index.
Key Takeaway
The FTSE 100 is a market-capitalisation-weighted index, meaning larger companies have a greater influence on its movements. A small number of large firms can therefore have a significant impact on the overall direction of the index.
Ways to gain exposure to the FTSE 100
There are several ways investors and traders gain exposure to the FTSE 100.
Index funds and ETFs
Many investors buy funds designed to track the performance of the FTSE 100 index. These funds aim to replicate the returns of the companies within the index. Take the iShares Core FTSE100 UCITS ETF for instance, with net assets of £14.8billion, and a favourable 0.07% total expense ratio.
Share investing
Another approach is buying shares in individual FTSE 100 companies directly through a share dealing account, for example BP, Centrica or the BT Group.
Trading derivatives
Some traders use products such as spread bets or CFDs to speculate on the price movements of the FTSE 100 index. These enable you to speculate on price movements – positive or negative – without owning any underlying assets. Both products are leveraged, and you’ll get full exposure with a small deposit, known as a margin. Bear in mind, though, that with leverage you run the risk of any losses or profits far outweighing your deposit as they are calculated on the position’s full size – not its margin. You can trade spread bets and offset CFD losses against profits, and these may be exempt from capital gains tax, though the level of tax paid depends on the individual circumstances of each client and is subject to change in the future. Stop losses may not protect against all losses in fast-moving markets. Read our article on managing your trading risk for more insights.
With both CFDs and spread bets (through (IG Markets Limited), you’ll get access to two types of indices market:
Cash indices
- Deal at the current price of the underlying market
- Tighter spreads
- Open positions subject to overnight funding charges
Index futures
- You agree to trade the index at a specific price on a specific date
- Wider spreads
- No overnight funding charges
You can also trade individual FTSE constituents and ETF trackers with derivatives or buy their shares outright via share dealing (through IG Trading and Investments).
Remember that leveraged trading can magnify both profits and losses.
FTSE 100 Pros & Cons
| Pros | Cons |
| Diversification opportunities | Low exposure to tech companies |
| Dividends paid | Weaker capital gains than other indices over time |
| Cheap expense fees | UK-specific geographical risk |
Why the FTSE 100 matters to investors
The FTSE 100 is one of the most closely followed stock market indices in Europe.
It provides a snapshot of how the largest UK-listed companies are performing and is often referenced by analysts, traders and the financial media when discussing the broader UK economy.
Because the index contains global businesses, movements in the FTSE 100 index can also reflect wider international economic trends.
FTSE 100 trading steps
- Create or log in to your IG trading account
- Look for ‘FTSE 100’ in the search panel
- Select ‘buy’ or ‘sell’ in the deal ticket and enter your position size
- Enter your stops and limits to manage your risk
- Confirm the trade and monitor your position
FTSE 100 FAQs
What does FTSE stand for?
FTSE stands for Financial Times Stock Exchange, the company that created the index in partnership with the London Stock Exchange.
What is the FTSE 100 index?
The FTSE 100 index tracks the performance of the 100 largest companies listed on the London Stock Exchange by market capitalisation.
Which country is the FTSE 100 from?
The FTSE 100 is the primary stock market index of the United Kingdom.
How many companies are in the FTSE 100?
There are 100 companies in the index, although the specific firms included can change during quarterly reviews.
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1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
The value of shares, ETFs and other ETPs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
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