What is the FTSE 100 and how to invest in it?

Written by James Caldwell
Last updated: 2nd September 2023

Welcome to our blog post on “What is the FTSE 100 and how to invest in it”. The FTSE 100 is a stock market index that measures the performance of the top 100 companies listed on the London Stock Exchange. It is widely used as a barometer of the UK stock market and is closely watched by investors worldwide. If you’re interested in investing in the FTSE 100, this blog post is for you. We’ll cover everything you need to know about the index, including how it works, how to invest in it, and some tips for successful investing. So, let’s get started!

What is the FTSE 100?

The FTSE 100 (Financial Times Stock Exchange Index 100) represents the largest share index comprising the biggest 100 companies (by market capitalisation) – hence “100” in its abbreviation.

The total market value of these 100 biggest companies is determined by multiplying the share price by the number of shares the company has issued – although these are UK companies, many of the 100 within the FTSE index has an international focus, meaning it isn’t solely representative of the UK economy.

The index was conceived in 1984 and has since grown exponentially, with many new companies rising into it over the years due to their growing market capitalization. Many existing companies are now gone or no longer included within the index, replaced by other larger companies.

What Companies make up the FTSE 100

Below is a complete listing of all FTSE 100 companies, divided by the company name, its EPIC (Exchange Price Information Code), the industry or sector the company works within, and some additional information.

Company EPIC Industry and More Info
3i III Financial Services
Admiral Group ADM Non-life Insurance
Airtel Africa AAF Telecommunications
Anglo American plc AAL Mining
Antofagasta plc ANTO Mining
Ashtead Group AHT Support Services
Associated British Foods ABF Food Producers
AstraZeneca AZN Pharmaceuticals & Biotechnology
Auto Trader Group AUTO Media
Aveva AVV Software & Computer Services
Aviva AV Life Insurance
B&M BME Retailers
BAE Systems BA Aerospace & Defence
Barclays BARC Banks
Barratt Developments BDEV Household Goods & Home Construction
Berkeley Group Holdings BKG Household Goods & Home Construction
BP BP. Oil & Gas Producers
British American Tobacco BATS Tobacco
British Land BLND Real Estate Investment Trusts
BT Group BT-A Fixed Line Telecommunications
Bunzl BNZL Support Services
Burberry BRBY Personal Goods
Centrica CNA Utilities
Coca-Cola HBC CCH Beverages
Compass Group CPG Support Services
Convatec CTEC Health Care
CRH plc CRH Construction & Materials
Croda International CRDA Chemicals
DCC plc DCC Support Services
Dechra Pharmaceuticals DPH Health Care
Diageo DGE Beverages
DS Smith SMDS General Industrials
Endeavour Mining EDV Mining
Entain ENT Travel & Leisure
Experian EXPN Support Services
Flutter Entertainment FLTR Travel & Leisure
Foreign & Colonial Investment Trust FCIT Financial Services
Frasers Group FRAS Retail
Fresnillo plc FRES Mining
Glencore GLEN Mining
GSK plc GSK Pharmaceuticals & Biotechnology
Haleon HLN Pharmaceuticals & Biotechnology
Halma plc HLMA Electronic & Electrical Equipment
Harbour Energy HBR Energy
Hargreaves Lansdown HL Financial Services
HomeServe HSV Insurance
IHG Hotels & Resorts IHG Travel & Leisure
Imperial Brands IMB Tobacco
Informa INF Media
Intermediate Capital Group ICP Investment Services
International Airlines Group IAG Travel & Leisure
Intertek ITRK Support Services
JD Sports JD General Retailers
Kingfisher plc KGF Retailers
Land Securities LAND Real Estate Investment Trusts
Legal & General LGEN Life Insurance
Lloyds Banking Group LLOY Banks
London Stock Exchange Group LSEG Financial Services
M&G MNG Asset Managers
Melrose Industries MRO Automobiles & Parts
Mondi MNDI Forestry & Paper
National Grid plc NG Gas, Water & Multi-utilities
NatWest Group NWG Banks
Next plc NXT General Retailers
Ocado Group OCDO Food & Drug Retailers
Pearson plc PSON Media
Pershing Square Holdings PSH Financial Services
Persimmon plc PSN Household Goods & Home Construction
Phoenix Group PHNX Life Insurance
Prudential plc PRU Life Insurance
Reckitt RKT Household Goods & Home Construction
Rentokil Initial RTO Support Services
Rightmove RMV Media
Rio Tinto RIO Mining
Rolls-Royce Holdings RR Aerospace & Defence
RS Group plc RS1 Industrials
Sage Group SGE Software & Computer Services
Sainsbury’s SBRY Food & Drug Retailers
Schroders SDR Financial Services
Scottish Mortgage Investment Trust SMT Equity Investment Instruments
Segro SGRO Real Estate Investment Trusts
Severn Trent SVT Gas, Water & Multi-utilities
Shell plc SHEL Oil & Gas Producers
Smith & Nephew SN Health Care Equipment & Services
Smiths Group SMIN General Industrials
Smurfit Kappa SKG General Industrials
Spirax-Sarco Engineering SPX Industrial Engineering
SSE plc SSE Electricity
St. James’s Place plc STJ Financial Services
Standard Chartered STAN Banks
Taylor Wimpey TW Household Goods & Home Construction
Tesco TSCO Food & Drug Retailers
Unilever ULVR Personal Goods
Unite Group UTG Real Estate
United Utilities UU Gas, Water & Multi-utilities
Vodafone Group VOD Mobile Telecommunications
Whitbread WTB Retail hospitality
WPP plc WPP Media



How do Companies get into the FTSE 100?

Each of these listed companies in the table above is currently part of the FTSE 100 – but how does a company become part of the largest share index?

A company must achieve several requirements before it can be listed on the FTSE 100 – these requirements are set by the FTSE Group, which is a subsidiary and provider of the stock market indices. In turn, they are owned by the London Stock Exchange.

To be listed, a company must:

  • Already be listed on the London Stock Exchange (LSE) – with a price denomination of Euro or Sterling.
  • Meet certain requirements covering liquidity and free float shares available.
  • They must also report their Quarterly financial results to determine if a company has market capitalisation within a certain industry or sector that accords with other FTSE 100 listings.

How can I invest in the FTSE 100?

There are numerous platforms and methods available to how you can invest in the FTSE 100. Listed below are the core examples of ways in which you can compare the fund or funds you wish to invest in – and the method of investment you wish to choose:

Buying shares individually – Through various trading platforms that have increased in accessibility over the years, you are able to buy individual shares in a certain company of your choice. However, this method requires the most oversight and personal responsibility when it comes to managing your investment – it would require knowledge of the stock market and time invested into your own research.

Investment Trusts – Investment trusts are often run by limited companies, who make their business through investing shareholders’ funds or funds acquired through investors in their limited company – they aim to diversify a portfolio on the behalf of shareholders. The shares in these trusts are bought and traded like any other public company on the stock exchange. 

ETFs – Like investment trusts, ETFs (Exchange-traded funds) are traded on a stock exchange, often tracking a particular index, such as the FTSE 100 or S&P 500. Investors increasingly prefer ETFs because of their low costs and stability. When you invest in an ETF you are investing in a diversified selection across UK industry from a variety of sectors – the stability comes through this diversification by not having all your investments tied to a single sector or industry, or specific company.

Investment Funds – Investment funds are simply a broad selection of stocks in the FTSE 100 or S&P 500. They are funds that allow for diversification, lower cost and proper management of said fund that may be unavailable to the sole investor. Investment funds comprise three categories; the already explained ETFs, open-ended, and closed-ended funds. A selection of FTSE 100 tracker funds can be found here.

Structured Products – We offer a number of structured investment products; here, you can view and compare our current offers. The investment plans featured on this site have defined investment terms where the investment objectives and risks are clearly outlined in the plan literature available on request.


Choosing an investment platform

If you have decided on a specific fund or funds you wish to invest in, then the next step would be to choose a fund platform – the advantage of a platform is that it gives you flexibility in managing your investments which you don’t get if you invest directly with one fund manager.

An online investment platform is simply an online account where you can access your investments, including shares, ISAs, and investment funds, all in one place.

You can buy funds online, usually at a discount. As well as having a direct account, you can hold the fund in a tax-free wrapper such as an ISA or a SIPP in many accessible trading platforms available.

With trading platforms online, you get:

  • Easy access to the stock market
  • readymade portfolios/funds to help you choose
  • And you all your ISAs, Junior ISAsand pensions (SIPPs) are all in one place

Most of the available platforms will provide useful research tools and ways to assess the performance of investment funds you might be considering investing in.


What is the best FTSE 100 Fund?

If you’re looking for investment funds in the FTSE 100, then it would be best to do some research. Having a keen understanding of the stock market is not essential, but without it comes a greater level of risk.

When you plan to invest in a fund, you want to look into the diversification of that specific fund – how broadly it may be spread between industries and sectors.

Ultimately, with ETFs or investment funds, you would be planning long-term investments as the returns (if you have invested wisely) will achieve greater yields on a yearly basis – anywhere from 1 to 5 years of investment or longer.

It is also important to consider that, depending on the platform you are using or the “wrapper” in which you are investing – be that an ISA or SIPP – there may be Ongoing Charges (OCF) while you hold an investment in any particular FTSE 100 Fund or multiple funds.

Below you can find a table listing some of the more popular FTSE 100 funds:


What has been the past performance of the FTSE 100?

The FTSE 100 has performed well, rising exponentially since its conception – yet, this is a narrow view of performance when you have not considered the many changes over the years.

It is important to note that looking at the past performance of any index or an individual stock, in general, is not a great guide for the future movements of that stock – meaning, you should not base your investments on past performance alone.

Over the long years, the FTSE 100 has evolved. From its conception, it was UK-orientated and did not comprise heavily of global companies that generate revenue through different currencies or massive overseas sales rather than at home.

The FTSE 100 is comprised of companies now that make their revenue in something other than sterling; when factoring in the currency exchange, this can lead to unpredictable swings for the FTSE 100 index and, moreover, its reliability as a marker for the UK economy overall.

The FTSE 100 is less representative of the UK’s economic situation as the index has shifted towards a more global and international focus that differs from its earlier conception and listings from 1984 onwards.

For a more robust UK-centric investment, you may look instead towards the FTSE 250, which encompasses a wider variety of UK stocks and better reflects the UK economy. For instance, the companies listed on the 250 generate a larger portion of their revenues in the UK than aboard.

An important consideration is a way in which the FTSE 100 is weighted towards certain industries or commodities – meaning, if investing in the FTSE 100, you may not want to invest elsewhere. If another index, or grouping of stocks, has a heavier weight towards a similar industry, you may end up with a narrow portfolio, leaving your money unprotected against unpredictable downturns within certain sectors of the industry.

Ultimately, wise investment often means building a diversified and balanced portfolio, and the FTSE 100 may be too narrow an investment as it stands today – at least as a sole investment.

IMPORTANT: No news, feature article or comment should be seen as a personal investment recommendation. Before deciding to invest, you should ensure that you are familiar with the risks associated with a particular plan. If you are unsure of the suitability of a particular product, both in respect of its objectives and risk profile, you should seek independent financial advice. The value of shares, ETFs and ETCs, bought through a share dealing account, stocks and shares ISA, or a SIPP can fall and rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 67%-81% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how spread bets and CFDs work and whether you can afford to risk losing your money. Professional clients can lose more than they deposit. All trading involves risk. Tax treatment of ISAs depends on your circumstances and is based on current law, which may be subject to change in the future. ISA transfer charges may apply; please check with your provider.