The Financial Times Stock Exchange 100 index – known everywhere as the FTSE or ‘footsie’ – is the main index of the London Stock Exchange. The FTSE includes the largest British companies with a London listing and is a major stock index – actually a set of indices, with the FTSE250 providing a broader measure of the overall UK economy.
When people refer to the FTSE, it is normally this index. The FTSE 100 is a simple index made up of the first 100 companies listed on the London Stock Exchange by market capitalisation. It is of somewhat limited use as a measure of the performance of the British economy since many of the largest companies carry out most of their business abroad, but it is a popular target for index tracking funds. Additionally, many active portfolio managers based in London use the FTSE 100 as their benchmark. The FTSE 100 involves a diverse range of businesses, but some of the best-represented sectors are mining, oil and gas and the financial industry.
A second index with the same name is the FTSE 250. This works on the same principle but includes the 250 largest businesses by market capitalisation, skewing the balance in favour of slightly smaller companies that are closely linked to the domestic economy. Portfolio managers are less interested in the FTSE 250 as it has lesser brand recognition, but it is popular amongst financial analysts trying to track the performance of the British economy. In comparison with the FTSE 100 the FTSE 250 is more focused on retail, construction and services businesses.
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