What Is the Financial Times Stock Exchange Group (FTSE)?
The Financial Times Stock Exchange (FTSE), now known as FTSE Russell Group, is a British financial organization that specializes in providing index offerings for the global financial markets. TheLondon Stock Exchange Group(LSEG) owns the FTSE Russell Group. In addition to the FTSE Russell Group, the LSEG also owns Borsa Italiana, Millennium IT, and other financial brands.
The indexing division of the FTSE is similar to that of ; it specializes in creating index offerings that the global financial markets can use as benchmarks. An index is comprised of a hypothetical portfolio of stock holdings, so it can act as a representation of the performance of a particular market segment—also called a benchmark.
Although the FTSE offers many indexes, its two most well-known indexes are the FTSE 100, whichis comprised of the most highly capitalizedblue-chip stockslisted on the London Stock Exchange, and the Russell 2000 Index, a small-cap stock market index of the smallest 2,000 stocks in the Russell 3000 Index.
Key Takeaways
- The Financial Times Stock Exchange (FTSE) Group is a financial organization that specializes in the management of asset exchanges and creating index offerings for the global financial markets.
- The London Stock Exchange (LSE) Group currently owns FTSE.
- In May 2015, FTSE Group combined with Russell to form the brand name, FTSE Russell.
- The FTSE 100 is generally the most well-known FTSE index, but the FTSE Group manages many indexes.
Understanding the Financial Times Stock Exchange Group (FTSE)
The FTSE Russell Group, established in 2015 after the merger of FTSE and Russell Investments, is a U.K.-based global provider of benchmark financial indexes, market data, and analytics.
The FTSE's indexes are available across asset classes, styles, and strategies and are designed to meet the needs of a wide variety of clients, including buy-side, sell-side, custodians, asset owners, exchanges, investment consultants, and exchange-traded fund (ETF) providers.
The FTSE 100 Index
The FTSE 100 is very widely usedin Europe. At its creation, in Jan. 1984, the index had a base level of 1,000. It has since reached highs of over 7,000. Many market analysts, traders, and investors look to the FTSE 100 as a proxy for the performance of the wider U.K. stock market, similar to the way that many U.S. investors look to the Dow Jones or the S&P 500 indexes.
The level of theFTSE100 is calculated using the total market capitalization of the constituent companies and the index value. Total market capitalization changes alongside individual share prices of the indexed companies throughout the trading day, so the index value also changes. When the FTSE 100 is quoted up or down, it is measured against the previous day’s marketclose.
It is calculated continuously on every trading day—from 8:00 a.m. at the market opening until the 4:30 p.m. LSE close. A FTSE 100 declinemeans the value of the largest U.K.-listedcompanies has decreased. When the FTSE hits a new high, it means the total worth of all the indexed companies has increased.
Readjustment of the indexconstituents (the companies that make up the FTSE 100) happens every quarter, usually, the Wednesday following the first Friday inMarch, June, September, and December. Any changes to the underlying index constituents and their weighting come from the values of the companies taken at the close of business the night before the review.
As of June 26, 2023, the top five FTSE 100 holdings by market cap were:
- AstraZeneca
- Shell
- HSBC
- Unilever
- BP
The FTSE 100 is often considered a leading indicator of prosperity for companies in the U.K. and the U.K. economy in general. As such, it typically draws investors looking for exposure to big U.K. companies. While several of its listings do include companies with homes outside of the U.K., it is most significantly made up of U.K. companies and impacted by U.K. daily developments.
Other FTSE Group Indices
As mentioned, there are a prolific number of indexes attached to the FTSE Group and the FTSE Russell brand. TheFTSE Group's most popularindexes—in addition tothe FTSE 100—are theFTSE 250, the FTSE 350, and the FTSE All-Share.
Some of the other popular FTSE Russell indices include:
- FTSE Nasdaq 500
- FTSE AIM 100
- FTSE RAFI US 1000
- FTSE4Good Indices
- FTSE Dividend Growth
- Russell Top 200
- Russell 3000
- Russell 2000
- Russell 1000
- Russell Equal Weight Indices
- Russell Geographic Exposure Indices
Investing in the FTSE
Though you cannot directly invest in an index, you can invest in funds that replicate, track, or even short the FTSE index. Many of these are exchange-traded funds (ETFs) that allow for easy access to the indices. Examples of funds that track these indices that you can invest in are the Vanguard FTSE 100, the Vanguard FTSE 250, the iShares 350 U.K. Equity Index Fund, the iShares Core FTSE 100, and the Vanguard FTSE U.K. All Share Index Unit Trust.
What Is the U.S. Version of the FTSE?
The "FTSE" is the Financial Times Stock Exchange in the U.K. that is a provider of different indices, its most popular being the FTSE 100, which tracks the top 100 companies by market cap in the U.K. The U.S. version of this would be the S&P 500, which tracks the top 500 U.S. companies by market cap, or the Dow Jones Industrial Average (DJIA), which tracks 30 prominent U.S. companies.
Can Americans Invest in the FTSE?
Yes, Americans can invest in the FTSE. The easiest way to do this is by investing in exchange-traded funds that track these indices, such as the Vanguard FTSE 100, the Vanguard FTSE 250, the iShares 350 U.K. Equity Index Fund, and the iShares Core FTSE 100.
What Is the Difference Between a Stock Market and a Stock Exchange?
A stock exchange is a specific organization/marketplace that facilitates equity trading. For example, the New York Stock Exchange and Nasdaq. A stock market is used as an umbrella term to refer to all of the stocks that trade in a particular country or region. Such as all of the companies that trade on both the New York Stock Exchange and the Nasdaq.
The Bottom Line
The Financial Times Stock Exchange, now known as the FTSE Russell Group, provides a variety of indices that track different segments of the U.K. financial markets. Its most popular index, the FTSE 100, tracks the top 100 companies by market cap in the United Kingdom, similarly to how the S&P 500 works in the U.S. Investors looking to gain exposure to these indices can invest in funds that track the indices, such as the iShares Core FTSE 100.
