[{"data":1,"prerenderedAt":80},["ShallowReactive",2],{"seo-guide-ftse-100-explained":3},{"slug":4,"title":5,"description":6,"pillar":7,"date":8,"updated":9,"type":10,"author":9,"image":9,"imageAlt":9,"imageWidth":9,"imageHeight":9,"keywords":9,"sections":11,"faqs":58},"ftse-100-explained","What the FTSE 100 Actually Tracks (And Why It's Not the UK Economy)","The FTSE 100 is widely quoted but widely misunderstood. Here's what it actually measures, why most of its revenue comes from overseas, and what that means for investors.","uk-stock-market","2025-02-10","","guide",[12,16,21,25,29,33,37,41,45,49,54],{"id":13,"type":13,"title":14,"html":15},"intro",null,"\u003Ch1>What the FTSE 100 Actually Tracks\u003C\u002Fh1>\n\u003Cdiv class=\"seo-callout\">\u003Cdiv class=\"callout-icon\">!\u003C\u002Fdiv>\u003Cdiv class=\"callout-text\">This guide is part of our [UK Stock Market](\u002Flearn\u002Fuk-stock-market) series.\u003C\u002Fdiv>\u003C\u002Fdiv>\n\n\u003Cp>The \u003Cstrong>FTSE 100\u003C\u002Fstrong> is the most widely quoted UK stock market index — and one of the most widely misunderstood. When the news says "UK shares fell today", they mean the FTSE 100. But the FTSE 100 is not a measure of the UK economy, and the 100 companies in it earn most of their revenue from overseas.\u003C\u002Fp>\n\u003Cp>This matters for investors because it affects what risk you're actually taking on when you invest in FTSE 100 companies.\u003C\u002Fp>\n\u003Chr>\n",{"id":17,"type":18,"title":19,"html":20},"what-is-the-ftse-100-","section","What is the FTSE 100?","\u003Cp>The FTSE 100 (often called the "Footsie") is an index made up of the \u003Cstrong>100 largest companies listed on the London Stock Exchange\u003C\u002Fstrong>, ranked by market capitalisation.\u003C\u002Fp>\n\u003Cp>It is maintained by \u003Ca href=\"https:\u002F\u002Fwww.ftserussell.com\u002F\">FTSE Russell\u003C\u002Fa> and recalculated in real time during market hours.\u003C\u002Fp>\n\u003Cp>Many FTSE 100 companies are global businesses. \u003Ca href=\"\u002Fequity\u002FSHEL\">Shell\u003C\u002Fa> earns most of its revenue from global energy markets. \u003Ca href=\"\u002Fequity\u002FAZN\">AstraZeneca\u003C\u002Fa> sells pharmaceutical drugs across 100+ countries. \u003Ca href=\"\u002Fequity\u002FHSBA\">HSBC\u003C\u002Fa> generates a majority of its profits in Asia. Their shares happen to be listed in London, but the UK economy is only a small part of their story.\u003C\u002Fp>\n\u003Cp>This is why the FTSE 100 often rises when sterling falls — the overseas earnings of constituent companies are worth more in pounds when the pound weakens. It can feel counterintuitive: bad news for the UK economy, but up goes the index.\u003C\u002Fp>\n\u003Cp>\u003Ca href=\"\u002F\">→ Browse FTSE 100 companies on openbook\u003C\u002Fa> | \u003Ca href=\"\u002Fequity\u002FSHEL\">→ See Shell's full factor analysis\u003C\u002Fa>\u003C\u002Fp>\n\u003Chr>\n",{"id":22,"type":18,"title":23,"html":24},"how-the-ftse-100-is-calculated","How the FTSE 100 is calculated","\u003Ch3>Market-capitalisation weighting\u003C\u002Fh3>\n\u003Cp>The FTSE 100 is \u003Cstrong>market-cap weighted\u003C\u002Fstrong>, meaning larger companies move the index more than smaller ones.\u003C\u002Fp>\n\u003Ctable>\n\u003Cthead>\n\u003Ctr>\n\u003Cth>Company size\u003C\u002Fth>\n\u003Cth>Impact on FTSE 100\u003C\u002Fth>\n\u003C\u002Ftr>\n\u003C\u002Fthead>\n\u003Ctbody>\u003Ctr>\n\u003Ctd>Very large company\u003C\u002Ftd>\n\u003Ctd>High influence\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>Mid-sized constituent\u003C\u002Ftd>\n\u003Ctd>Moderate influence\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>Smallest member\u003C\u002Ftd>\n\u003Ctd>Limited influence\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003C\u002Ftbody>\u003C\u002Ftable>\n\u003Cp>If a handful of the biggest companies rise or fall sharply, the index can move even if most members barely change.\u003C\u002Fp>\n\u003Cdiv class=\"seo-callout\">\u003Cdiv class=\"callout-icon\">!\u003C\u002Fdiv>\u003Cdiv class=\"callout-text\">A common mistake is assuming each company \"counts the same\". In practice, weight matters more than headcount.\u003C\u002Fdiv>\u003C\u002Fdiv>\n\n\u003Ch3>Quarterly reviews\u003C\u002Fh3>\n\u003Cp>The index is reviewed \u003Cstrong>four times a year\u003C\u002Fstrong>.\u003C\u002Fp>\n\u003Ctable>\n\u003Cthead>\n\u003Ctr>\n\u003Cth>Review month\u003C\u002Fth>\n\u003Cth>What happens\u003C\u002Fth>\n\u003C\u002Ftr>\n\u003C\u002Fthead>\n\u003Ctbody>\u003Ctr>\n\u003Ctd>March\u003C\u002Ftd>\n\u003Ctd>Promotions and relegations\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>June\u003C\u002Ftd>\n\u003Ctd>Index rebalancing\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>September\u003C\u002Ftd>\n\u003Ctd>Membership updated\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>December\u003C\u002Ftd>\n\u003Ctd>Final annual review\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003C\u002Ftbody>\u003C\u002Ftable>\n\u003Cp>Companies can move into or out of the FTSE 100 as their market value changes. Membership is not permanent.\u003C\u002Fp>\n\u003Chr>\n",{"id":26,"type":18,"title":27,"html":28},"what-drives-ftse-100-performance-","What drives FTSE 100 performance?","\u003Cp>Several factors tend to matter more than UK economic growth alone:\u003C\u002Fp>\n\u003Ch3>1. Global earnings\u003C\u002Fh3>\n\u003Cp>Many FTSE 100 firms earn profits overseas. Global demand, commodity prices, and international growth often matter more than UK GDP.\u003C\u002Fp>\n\u003Ch3>2. Currency movements\u003C\u002Fh3>\n\u003Cp>A weaker pound can boost reported earnings for companies earning dollars or euros — which can lift the index even when the UK economy struggles.\u003C\u002Fp>\n\u003Ch3>3. Sector concentration\u003C\u002Fh3>\n\u003Ctable>\n\u003Cthead>\n\u003Ctr>\n\u003Cth>Sector (approx.)\u003C\u002Fth>\n\u003Cth>Typical weight\u003C\u002Fth>\n\u003C\u002Ftr>\n\u003C\u002Fthead>\n\u003Ctbody>\u003Ctr>\n\u003Ctd>Energy & mining\u003C\u002Ftd>\n\u003Ctd>High\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>Financials\u003C\u002Ftd>\n\u003Ctd>High\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>Consumer staples\u003C\u002Ftd>\n\u003Ctd>Medium\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>Technology\u003C\u002Ftd>\n\u003Ctd>Low\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003C\u002Ftbody>\u003C\u002Ftable>\n\u003Cp>This explains why the FTSE 100 behaves very differently from US indices like the S&P 500.\u003C\u002Fp>\n\u003Chr>\n",{"id":30,"type":18,"title":31,"html":32},"ftse-100-vs-ftse-250","FTSE 100 vs FTSE 250","\u003Cp>Many investors group "the UK market" into one bucket. In practice, the split matters.\u003C\u002Fp>\n\u003Ctable>\n\u003Cthead>\n\u003Ctr>\n\u003Cth>Feature\u003C\u002Fth>\n\u003Cth>FTSE 100\u003C\u002Fth>\n\u003Cth>FTSE 250\u003C\u002Fth>\n\u003C\u002Ftr>\n\u003C\u002Fthead>\n\u003Ctbody>\u003Ctr>\n\u003Ctd>Company size\u003C\u002Ftd>\n\u003Ctd>Largest\u003C\u002Ftd>\n\u003Ctd>Mid-sized\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>Revenue source\u003C\u002Ftd>\n\u003Ctd>Mostly global\u003C\u002Ftd>\n\u003Ctd>More UK-focused\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>Volatility\u003C\u002Ftd>\n\u003Ctd>Typically lower\u003C\u002Ftd>\n\u003Ctd>Typically higher\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003Ctr>\n\u003Ctd>Dividend focus\u003C\u002Ftd>\n\u003Ctd>Higher\u003C\u002Ftd>\n\u003Ctd>Lower\u003C\u002Ftd>\n\u003C\u002Ftr>\n\u003C\u002Ftbody>\u003C\u002Ftable>\n\u003Cp>Over shorter periods, the two indices can behave very differently. Domestic economic news often affects the FTSE 250 more than the FTSE 100.\u003C\u002Fp>\n\u003Cdiv class=\"seo-callout\">\u003Cdiv class=\"callout-icon\">!\u003C\u002Fdiv>\u003Cdiv class=\"callout-text\">*FTSE 100 = global exposure via UK listings*\u003C\u002Fdiv>\u003C\u002Fdiv>\n\u003Cdiv class=\"seo-callout\">\u003Cdiv class=\"callout-icon\">!\u003C\u002Fdiv>\u003Cdiv class=\"callout-text\">*FTSE 250 = closer link to the UK economy*\u003C\u002Fdiv>\u003C\u002Fdiv>\n\n\u003Chr>\n",{"id":34,"type":18,"title":35,"html":36},"dividends-and-income","Dividends and income","\u003Cp>The FTSE 100 is known for its \u003Cstrong>relatively high dividend yield\u003C\u002Fstrong> compared with many overseas indices.\u003C\u002Fp>\n\u003Cp>There are structural reasons for this:\u003C\u002Fp>\n\u003Cul>\n\u003Cli>Mature companies with steady cash flows  \u003C\u002Fli>\n\u003Cli>Fewer high-growth firms reinvesting all profits  \u003C\u002Fli>\n\u003Cli>A long-standing UK culture of dividend payments\u003C\u002Fli>\n\u003C\u002Ful>\n\u003Cp>That said, dividends are \u003Cstrong>not guaranteed\u003C\u002Fstrong>. Payouts can be cut or suspended, especially during economic stress. During the 2020 pandemic, dozens of FTSE 100 companies cut or suspended dividends.\u003C\u002Fp>\n\u003Cdiv class=\"seo-callout\">\u003Cdiv class=\"callout-icon\">!\u003C\u002Fdiv>\u003Cdiv class=\"callout-text\">Many investors focus on dividends without considering sustainability. Understanding *why* a dividend exists matters more than its headline yield.\u003C\u002Fdiv>\u003C\u002Fdiv>\n\n\u003Cp>For more on tracking dividend income, see our \u003Ca href=\"\u002Flearn\u002Fguides\u002Fdividend-tracker-uk\">Dividend Tracker UK\u003C\u002Fa> guide.\u003C\u002Fp>\n\u003Chr>\n",{"id":38,"type":18,"title":39,"html":40},"what-the-ftse-100-is-and-isn-t-good-at-measuring","What the FTSE 100 is (and isn't) good at measuring","\u003Ch3>What it does well\u003C\u002Fh3>\n\u003Cp>The FTSE 100 is often used to:\u003C\u002Fp>\n\u003Cul>\n\u003Cli>Track performance of large, established companies  \u003C\u002Fli>\n\u003Cli>Compare UK market returns over long periods  \u003C\u002Fli>\n\u003Cli>Provide income signals, as many constituents pay dividends  \u003C\u002Fli>\n\u003Cli>Act as a reference point for funds and pensions\u003C\u002Fli>\n\u003C\u002Ful>\n\u003Cp>Because many FTSE 100 firms are global, the index can sometimes hold up better than purely domestic UK indicators when sterling weakens.\u003C\u002Fp>\n\u003Ch3>What it doesn't do well\u003C\u002Fh3>\n\u003Cp>It's less useful for:\u003C\u002Fp>\n\u003Cul>\n\u003Cli>Measuring the health of the UK economy  \u003C\u002Fli>\n\u003Cli>Capturing fast-growing smaller companies  \u003C\u002Fli>\n\u003Cli>Representing newer industries and technology firms\u003C\u002Fli>\n\u003C\u002Ful>\n\u003Cp>Sectors like energy, mining, and financials tend to dominate, while technology has a much smaller presence than in US indices.\u003C\u002Fp>\n\u003Chr>\n",{"id":42,"type":18,"title":43,"html":44},"common-mistakes-investors-make-with-the-ftse-100","Common mistakes investors make with the FTSE 100","\u003Cul>\n\u003Cli>\u003Cstrong>Assuming it reflects the UK economy\u003C\u002Fstrong> – It's more global than domestic\u003C\u002Fli>\n\u003Cli>\u003Cstrong>Watching only the headline number\u003C\u002Fstrong> – Total return includes dividends\u003C\u002Fli>\n\u003Cli>\u003Cstrong>Ignoring sector concentration\u003C\u002Fstrong> – A few sectors dominate\u003C\u002Fli>\n\u003Cli>\u003Cstrong>Chasing high dividends without context\u003C\u002Fstrong> – Yield can be misleading\u003C\u002Fli>\n\u003Cli>\u003Cstrong>Treating index membership as fixed\u003C\u002Fstrong> – It changes quarterly\u003C\u002Fli>\n\u003C\u002Ful>\n\u003Chr>\n",{"id":46,"type":18,"title":47,"html":48},"analysing-ftse-100-companies-on-openbook","Analysing FTSE 100 Companies on Openbook","\u003Cp>Individual FTSE 100 companies vary enormously in quality. The index contains both resilient global businesses with strong balance sheets and mature, slow-growing companies propped up by high yields.\u003C\u002Fp>\n\u003Cp>Openbook's 7-factor model scores each FTSE 100 company across Growth, Momentum, Profitability, Valuation, Balance Sheet, Cash Flow, and Volatility. This lets you compare companies that look similar on the surface — for example, two energy majors with similar yields but very different cash flow quality or balance sheet strength.\u003C\u002Fp>\n\u003Cp>Some examples worth exploring:\u003C\u002Fp>\n\u003Cul>\n\u003Cli>\u003Ca href=\"\u002Fequity\u002FSHEL\">Shell (SHEL)\u003C\u002Fa> — one of the index's largest constituents by weight; strong cash generation\u003C\u002Fli>\n\u003Cli>\u003Ca href=\"\u002Fequity\u002FAZN\">AstraZeneca (AZN)\u003C\u002Fa> — high Profitability and Growth scores, higher Valuation than most UK peers\u003C\u002Fli>\n\u003Cli>\u003Ca href=\"\u002Fequity\u002FLLOY\">Lloyds (LLOY)\u003C\u002Fa> — domestic UK bank; dividend-focused, sensitive to UK interest rates\u003C\u002Fli>\n\u003Cli>\u003Ca href=\"\u002Fequity\u002FBP.\">BP (BP.)\u003C\u002Fa> — energy major with a different financial profile and restructuring history to Shell\u003C\u002Fli>\n\u003Cli>\u003Ca href=\"\u002Fequity\u002FBATS\">British American Tobacco (BATS)\u003C\u002Fa> — very high yield, but the Balance Sheet and Cash Flow factors tell a more complex story\u003C\u002Fli>\n\u003C\u002Ful>\n\u003Cp>openbook lets you:\u003C\u002Fp>\n\u003Cul>\n\u003Cli>See which FTSE 100 companies you own and how they score across all 7 factors\u003C\u002Fli>\n\u003Cli>Understand sector concentration in your portfolio\u003C\u002Fli>\n\u003Cli>Track dividend income alongside factor-based risk signals\u003C\u002Fli>\n\u003C\u002Ful>\n\u003Cp>\u003Ca href=\"https:\u002F\u002Fopenbookanalytics.com\" class=\"seo-cta-button\">Start free with openbook (no card) →\u003C\u002Fa>\u003C\u002Fp>\n\u003Chr>\n",{"id":50,"type":51,"title":52,"html":53},"frequently-asked-questions","faq","Frequently Asked Questions","\u003Ch3>Is the FTSE 100 the same as the UK stock market?\u003C\u002Fh3>\n\u003Cp>No. It covers only the largest 100 listed companies. Thousands of other shares trade in the UK outside the index.\u003C\u002Fp>\n\u003Ch3>Why does the FTSE 100 sometimes rise when the UK economy struggles?\u003C\u002Fh3>\n\u003Cp>Many companies earn revenue overseas. Currency moves and global conditions can matter more than domestic growth.\u003C\u002Fp>\n\u003Ch3>How often does the FTSE 100 change?\u003C\u002Fh3>\n\u003Cp>It's reviewed quarterly, with changes based on company size.\u003C\u002Fp>\n\u003Ch3>Is the FTSE 100 mainly for income investors?\u003C\u002Fh3>\n\u003Cp>It's often associated with income, but outcomes depend on dividends, valuations, and market conditions.\u003C\u002Fp>\n\u003Ch3>Can one company dominate the index?\u003C\u002Fh3>\n\u003Cp>Large companies have more weight, but caps are applied to prevent extreme concentration.\u003C\u002Fp>\n\u003Ch3>Does a higher FTSE 100 always mean investors are doing well?\u003C\u002Fh3>\n\u003Cp>Not necessarily. Returns depend on timing, dividends, inflation, and individual circumstances.\u003C\u002Fp>\n\u003Ch3>What's the difference between FTSE 100 price return and total return?\u003C\u002Fh3>\n\u003Cp>Price return shows index movement only. Total return includes reinvested dividends, which historically account for a significant portion of returns.\u003C\u002Fp>\n\u003Chr>\n",{"id":55,"type":18,"title":56,"html":57},"related-pages","Related Pages","\u003Cul>\n\u003Cli>\u003Ca href=\"\u002Flearn\u002Fguides\u002Fftse-100-dividend-calendar\">FTSE 100 Dividend Calendar\u003C\u002Fa>\u003C\u002Fli>\n\u003Cli>\u003Ca href=\"\u002Flearn\u002Fguides\u002Fdividend-tracker-uk\">Dividend Tracker UK\u003C\u002Fa>\u003C\u002Fli>\n\u003Cli>\u003Ca href=\"\u002Flearn\u002Fguides\u002Fportfolio-tracker-uk\">Portfolio Tracker for UK Investors\u003C\u002Fa>\u003C\u002Fli>\n\u003C\u002Ful>\n\u003Chr>\n\u003Cp>\u003Cem>This page is for informational purposes only and is not financial advice.\u003C\u002Fem>\u003C\u002Fp>\n",[59,62,65,68,71,74,77],{"q":60,"a":61},"Is the FTSE 100 the same as the UK stock market?","No. It covers only the largest 100 listed companies. Thousands of other shares trade in the UK outside the index.",{"q":63,"a":64},"Why does the FTSE 100 sometimes rise when the UK economy struggles?","Many companies earn revenue overseas. Currency moves and global conditions can matter more than domestic growth.",{"q":66,"a":67},"How often does the FTSE 100 change?","It's reviewed quarterly, with changes based on company size.",{"q":69,"a":70},"Is the FTSE 100 mainly for income investors?","It's often associated with income, but outcomes depend on dividends, valuations, and market conditions.",{"q":72,"a":73},"Can one company dominate the index?","Large companies have more weight, but caps are applied to prevent extreme concentration.",{"q":75,"a":76},"Does a higher FTSE 100 always mean investors are doing well?","Not necessarily. Returns depend on timing, dividends, inflation, and individual circumstances.",{"q":78,"a":79},"What's the difference between FTSE 100 price return and total return?","Price return shows index movement only. Total return includes reinvested dividends, which historically account for a significant portion of returns. ---",1784090687884]