What Does FTSE Stand for in Stocks?

by Contributor

The FTSE, an acronym for the Financial Times (FT) and London Stock Exchange (LSE) is a group of indexes that trade in the stock market in the United Kingdom. These indexes are considered a gauge of the financial health of the British stock market.

Types

There are several different indexes included in the FTSE group. The FTSE 100 is the most widely referred to index, trading in 100 of the largest and most valuable companies that trade in Britain. Others include the FTSE 250 and the FTSE 100 Dividend Index.

Features

The FTSE 100 represents some of the largest companies in Britain as measured by market capitalization. Index stocks are reviewed quarterly for liquidity. Each of the FTSE 100 components trade on the LSE, and the index trades in both the British pound and the euro.

History

The FTSE 100 was launched in 1984, at which time the index was valued at 1,000. Performance during the week of Oct. 6, 2008 was the worst on record when the FTSE 100 lost 20 percent of its value as the global economy was entering a recession.

Industries

Energy is the most widely represented index in the FTSE 100. British Petroleum, Britain's largest energy company, represents nearly 10 percent of the value of the index. Other industries represented include pharmacy, biotechnology and tobacco.

Value

The value for FTSE indexes is calculated by the same standards used to value the U.S. Dow Jones industrial average. The larger the value of an FTSE component, the more weight it is given in the calculation of the index's total value.

Photo Credits

  • photo_camera Image by Flickr.com, courtesy of Rene Ehrhardt