Skip to main content

You are here

Blog Listing Page

FTSE 100 mirrors the UK stock market

For domestic and international investors alike, the FTSE 100 is one of the most familiar global share indexes.

The FTSE 100 was launched on January 3, 1984 at an index level of 1000. From its start, the FTSE 100 introduced a revolutionary feature—minute by minute price updates—that allowed UK investors to experience the equity market’s changing fortunes almost instantaneously. (Earlier indexes were calculated only monthly or, at best, hourly).

With advances in technology and changes in stock market practice, the FTSE 100 was soon calculated every 15 seconds and is now calculated effectively in real time, with each price change in its constituents reflected instantaneously in the index’s value. New types of financial product, such as index-tracking exchange traded funds (ETFs), have evolved hand-in-hand with the shift to real-time index updates.

This continuous process of changing FTSE 100 index values has now gone on uninterrupted for over three decades during London Stock Exchange trading hours, with one exception.  On Friday October 16, 1987 hurricane force winds caused such devastation around London that not enough market makers made it to work to quote share prices via the Stock Exchange’s SEAQ trading system.

Since its introduction, the FTSE 100 has also witnessed important changes in its methodology, most notably the adjustment of constituents’ index weightings by an investability (or “free float”) factor from 2001 onwards.

During a time of rapidly rising popularity of index-based investment products, free float adjustment helped avoid potential price distortions in index constituents with a limited proportion of their share capital available for public trading.

On March 20, 2015, the FTSE 100 crossed the psychologically important 7,000 threshold. The previous record was fifteen years old, with an index level of 6,930.2 recorded on 30 December 1999 during the “dot-com” share market boom.

The FTSE 100 since Inception

Source: FTSE, 31/12/1983-11/03/2015. Past performance is no guarantee of future returns.

Understandably, it’s such records, as well as the more mundane daily index movements, that form the basis of most share market news reports.

But over the 31 years since its launch, it’s arguably the subtle, less noticed changes that have helped the FTSE 100 to serve its primary purpose—holding a mirror to the evolving UK share market.

 

 

© 2015 London Stock Exchange Group companies.

London Stock Exchange Group companies includes FTSE International Limited (“FTSE”), Frank Russell Company (“Russell”), MTS Next Limited (“MTS”), and FTSE TMX Global Debt Capital Markets Inc (“FTSE TMX”). All rights reserved.

“FTSE®”, “Russell®”, “MTS®”, “FTSE TMX®” and “FTSE Russell” and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX and Russell under license.

All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by the London Stock Exchange Group companies nor its licensors for any errors or for any loss from use of this publication.

Neither the London Stock Exchange Group companies nor any of their licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Russell Indexes or the fitness or suitability of the FTSE Russell Indexes for any particular purpose to which they might be put.

The London Stock Exchange Group companies do not provide investment advice and nothing in this communication should be taken as constituting financial or investment advice. The London Stock Exchange Group companies make no representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the London Stock Exchange Group companies. Distribution of the London Stock Exchange Group companies’ index values and the use of their indexes to create financial products require a license with FTSE, FTSE TMX, MTS and/or Russell and/or its licensors.

Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets. Certain returns shown may reflect back-tested performance. All performance presented prior to the index inception date is back-tested performance. Back-tested performance is not actual performance, but is hypothetical. The back-test calculations are based on the same methodology that was in effect when the index was officially launched. However, back-tested data may reflect the application of the index methodology with the benefit of hindsight, and the historic calculations of an index may change from month to month based on revisions to the underlying economic data used in the calculation of the index.

 

Blog Listing Page