The FTSE 100 index is representative of the the value of the 100 largest companies listed on the London Stock Exchange. It received its name as it was a venture that was previously owned by the Financial Times and London Stock Exchange, but is now maintained by the FTSE group, of which the London Stock Exchange is the ultimate holder.
The index calculates the aggregate change of the value of the 100 companies and provides an updated value every 15 seconds. Therefore if the index has gone ‘up’ during the day, it generally means the value of the biggest companies on the exchange have gone up – although the share price of some companies may also be down as the index works on an aggregate principle.
Companies are integrated or removed from the FTSE 100 every quarter based on their market capitalisation or total value of the company.
The likes of BP, HSBC and Vodafone are among the top companies included in the FTSE 100.
Investors find keeping track of the FTSE 100 movements useful as it provides a good overview of general sentiment and mood in the market.
The FTSE 250 works on the same basis – but features only the the next 250 biggest companies on the London Stock Exchange.