What Is The FTSE All-Share Index?
The FTSE All-Share Index (ASX) tracks the prices of companies listed on the London Stock Exchange's (LSE) main market. Companies listed on the index are screened to meet minimum size and liquidity standards. However, the FTSE All-Share Index is considered to be the broadest price performance measure for the London equity market.
The index's listings represent approximately 98% of the market capitalisation of listed shares in the United Kingdom. Because of its broad representation of UK shares, the index is commonly used as the basis for investment products, including funds and exchange-traded funds (ETFs).
History Of FTSE All-Share Index
The FTSE All-Share Index was originally launched in 1962 as the FT Actuaries All-Share Index, and it was initially designed for use in the creation of tracking funds and derivatives, and as a performance benchmark.
In December 1983, January 1984 and October 1992, respectively, the market index was enhanced with the addition of three new sub-indices, the FTSE 100, FTSE 250 and the FTSE 350. The FTSE, or Financial Times Stock Exchange, was established as a joint venture between the London Stock Exchange and the Financial Times in 1995 after Wood Mackenzie sold its stake in the FT Actuaries All-Share Index to Standard & Poor's.
The FTSE All-Share Index is managed by FTSE Russell, which is wholly owned by London Stock Exchange Group, and it has a base value of 100 points referent to its level on April 10, 1962. The index reached a peak of more than 3,830 points in April 2015.
The index's relative value is a representation of the performance of its constituents' share prices. In this way, it is a contemporary of the Nikkei 225, Dow Jones Industrial Average (DJIA) and NASDAQ.
Accordingly, the FTSE All-Share Index is a premier benchmark in the investment trust and asset management environments. One prominent example is the Blackrock iShares UK Equity Index Fund, which is denominated in GBP. As of this writing (April 2022), the iShares UK Equity Index Fund has produced -1.52% YTD returns, but a 24.59% five year total return.
FTSE All-Share Index's Composition
The FTSE All-Share Index is the aggregation of the FTSE 100, FTSE 250 and FTSE Small Cap Indices, and it includes a total of 603 listings with a net market capitalisation of £2.44 trillion. The average market capitalisation is £4.04 billion, with the largest market capitalisation being £160.99 billion and the smallest £14 million.
The average dividend yield for companies on the index is 3.11%, while the weight of the largest listing on the index is 6.6%. The top ten listings on the index include: HSBC Hldgs, British American Tobacco, Royal Dutch Shell, GlaxoSmithKline, BP, AstraZeneca, Diageo, Rio Tinto and Glencore. Together, these companies account for a total weight on the index of 39.32%.
The top sectors represented on the index include the following:
- Oil & gas with 14 listings and market capitalisation of £242,165 million
- Basic materials with 22 listings and market capitalisation of £214,385 million
- Industrials with 90 listings and a market capitalisation of £292,217 million
- Consumer goods with 25 listings and market capitalisation of £356,190 million
- Health care with 13 listings and market capitalisation of £266,516 million
- Consumer services with 92 listings and market capitalisation of £263,288 million
- Telecommunications with 6 listings and market capitalisation of £51,069 million
- Utilities with 10 listings and market capitalisation of £88,481 million
- Financials with 256 listings and market capitalisation of £551,321 million
- Technology, with 22 listings and market capitalisation of £34,323 million
London Stock Exchange (LSE)
The LSE manages the largest stock market in Europe and the third-largest in the world according to the value of listed companies. In March 2016, LSE and the Deutsche Börse announced they had reached an agreement to merge. However, the merger was blocked in 2017 by EU regulators. Subsequently, the £21 billion (US$27.3 billion) acquisition did not come to pass.
Listings on the FTSE Index Series are subject to minimum requirements for free float. To be eligible for inclusion in the FTSE UK Index Series, equities must have a minimum free float of 25% if the issuing company is UK incorporated, and 50% if it is non-UK incorporated. New listings can have a free float of as low as 5% as long as the minimum requirements are met within 12 months of the company's first day of trading. These guidelines are in place to ensure real-time tradability and minimise the negative impact of extreme volatility.
Securities must also meet requirements for price, size and liquidity. FTSE stipulates there must be "an accurate and reliable price for the purposes of determining the market value of a company." All companies with eligible securities are ranked by their full market capitalisation according to their quoted equity capital.
At the June annual review, companies whose full market capitalisation is greater than 0.15% of the full market capitalisation of the FTSE SmallCap Index and have an investable market cap equal to or greater than GBP 50 million will be added to the FTSE All-Share Index.
Companies with market capitalisation of less than 0.10% of the FTSE SmallCap Index or have an investable market cap less than GBP 30 million are excluded from the FTSE All-Share Index. Instead, they are added to the FTSE Fledgling Index. Quarterly reviews (in September, December and March) are used to determine possible additions or deletions from the index.
To meet liquidity requirements, securities on the index must turn over at least 0.025% of their shares in issue based on their monthly median for at least 10 of the 12 months prior to the annual index review.
FXCM Research Team
FXCM Research Team consists of a number of FXCM's Market and Product Specialists.
Articles published by FXCM Research Team generally have numerous contributors and aim to provide general Educational and Informative content on Market News and Products.
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