Investing has remained popular all over the UK and this is certainly true for financially savvy people around London. As the nation’s capital and banking hub, it’s perhaps no surprise to see residents of the city choosing to invest.
For modern-day investors in London, there are a huge number of choices when it comes to asset types to put money into or specific assets to trade. The FTSE 100 is an enduringly popular example – but what do investors need to know about it?
What is the FTSE 100?
A good place to start is knowing just what this index is and what it’s all about. But what does FTSE stand for exactly?
The full title of the FTSE 100 is actually the Financial Times Stock Exchange 100, and this gives a clue as to what it contains. The FTSE is a stock market index which tracks the largest 100 companies in the UK by market capitalisation. Launched in 1984, it was created by the Financial Times Stock Exchange to match similar indices from other nations (such as the S&P 500 in the US).
What does the FTSE 100 mean for investors in London?
For any investors based in the UK’s capital city, the FTSE 100 is relevant in a few different ways. The most important for many is how it enables them to gauge the performance of the biggest firms on the London Stock Exchange and which might be worth putting money into at that moment in time. This opens up new investment opportunities to traders in London who may focus on the LSE and enables them to easily spot trading picks to research.
If you’re a London-based investor, the FTSE 100 also means you can easily get a snapshot of how the London Stock Exchange is faring overall and how well or badly it’s currently performing.
If the FTSE 100 is looking strong overall and the majority of companies in it are performing well, it’s a sign that the LSE is also in good health. This then enables London-based investors to manage any assets in their portfolio accordingly or look at buying shares in LSE/FTSE100 listed firms.
This is also true in terms of the overall UK economy, where the state of the FTSE 100 can be used by investors to get an idea of the country’s financial outlook and how this might impact their assets on a wider scale. For investors who like to keep an eye on the latest UK business news, the FTSE 100 can be very useful to keep tabs on
What else does the FTSE 100 mean for London investors?
The UK’s leading stock index is also a great tool for bringing more choice to investors in London, in terms of where they put their money. Traders who might not normally get involved with buying individual stocks, for example, may well feel more confident investing via CFD’s in the FTSE 100. This enables them to broaden their investment horizons and add diversity to their portfolio.
On a more personal level, the FTSE 100 is a source of great pride for investors in the city and means where they live has a financial index to rival other great financial hubs globally. This keeps London at the heart of international investment and ensures it stays a vibrant place for people to locally put their cash to work.
How does the FTSE 100 work?
The FTSE 100 uses what is known as a Float-Adjusted Market Capitalisation system. Although this might sound tricky to understand, it’s pretty simple when you break it down.
The Financial Times and LSE look at the total market capitalisation UK firms have and only take openly traded shares into account. Each company is then awarded a ‘weight’ in the FTSE 100, and this allows a list of the top 100 companies on London’s Stock Exchange to be created. Values are reworked at the end of each trading day and the index is updated as a result.
What are the top FTSE 100 companies?
As this index is constantly being updated, companies can come and go from it over time. There are some huge names in UK business though which are real staples to know about. These firms have generally performed strongly over time to remain part of the FTSE 100 and can be good investments to research.
AstraZeneca (AZN.ST)
One of the biggest LSE listed pharmaceutical/biotech companies, AstraZeneca launched in 1999 and were at the forefront of developing COVID vaccines. Their other main focuses include neuroscience, cardiovascular and oncology. The company currently has 4000+ workers based in the UK and a diverse workforce spread across the globe.
Unilever (ULVR-L)
Founded way back in 1929, Unilever is based in London and is known as a consumer-packaged goods company. This sees them trading everything from cleaning products to healthcare items, food and more! One of the top FTSE 100 performers traditionally, they remain ever-present on the index.
Glencore (GLEN-L)
Known as the biggest commodity company in the world at one time, Glencore is a mining/commodity firm which is listed on the FTSE 100. Although it may be a Swiss firm with a multi-national reach, it has a London HQ and an LSE listing to be eligible for the FTSE 100.
Natwest (NWG.L)
Another major UK company for FTSE 100 traders to know about is Natwest. This is one of the country’s top banking groups and a key player in the nation’s financial sector. With branches across the country and a firm online presence, it is one of the LSE’s top listed organisations.
FTSE 100 for London investors: An overview
The key thing for investors in London to understand about the FTSE 100 is that it’s an index of the largest 100 firms in the UK by market capitalisation at a given moment in time.
Many investors in the city find it useful not only as an asset to trade via CFD’s but also as an instrument to gauge how healthy the London Stock Exchange is or how the nation’s financial outlook is looking generally. London-based investors also find this a useful index when looking for the biggest UK companies to invest in and a viable place to find new investment ideas to look into.
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