FTSE All-Share Index

Overview

The FTSE All-Share Index 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 capitalization 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).1)Retrieved 18 April 2016 http://www.ftse.com/Analytics/FactSheets

History

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.2)Retrieved 18 April 2016 http://www.ftserussell.com/about-us/our-history

In January 1984 and October 1992, respectively, the index was enhanced with the addition of two new sub-indices, the FTSE 100 and the FTSE 250. 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.3)Retrieved 18 April 2016 http://www.ftserussell.com/about-us/our-history

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 2015.4)Retrieved 18 April 2016 http://www.ftserussell.com/about-us/our-history

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 639 listings with a total market capitalization of £2.0 trillion. The average market capitalization is £3.14 billion, with the largest market capitalization being £88 billion and the smallest £30 million.5)Retrieved 18 April 2016 http://www.ftse.com/Analytics/FactSheets

The average dividend yield for companies on the index is 3.73%, while the weight of the largest listing on the index is 4.4%. The top ten listings on the index include: HSBC Hldgs, British American Tobacco, Royal Dutch Shell A, GlaxoSmithKline, BP, Royal Dutch Shell B, Vodafone Group, AstraZeneca, Diageo, Lloyds Banking Group. Together, these companies account for a total weight on the index of 32.13%.6)Retrieved 18 April 2016 http://www.ftse.com/Analytics/FactSheets

  • The top sectors represented on the index include the following:
  • Oil & gas with 18 listings and market capitalization of £223,939 billion
  • Basic materials with 27 listings and market capitalization of £111,267 billion
  • Industrials with 120 listings and a market capitalization of £210,507 billion
  • Consumer goods with 41 listings and market capitalization of £344,464 billion
  • Health care with 20 listings and market capitalization of £173,225 billion
  • Consumer services with 96 listings and market capitalization of £246,884 billion
  • Telecommunications with 7 listings and market capitalization of £104,020 billion
  • Utilities with 7 listings and market capitalization of £80,285 billion
  • Financials with 283 listings and market capitalization of £483,273 billion
  • Technology, with 20 listings and market capitalization of £29,758 billion7)Retrieved 18 April 2016 http://www.ftse.com/Analytics/FactSheets

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. If approved, the new exchange becomes the world’s second-largest, as measured by market value.8)Retrieved 18 April 2016 http://www.bloomberg.com/news/articles/2016-03-16/lse-agrees-to-merge-with-german-rival-to-create-european-titan

Index Rules

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.

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.”9)Retrieved 18 April 2016 http://www.ftse.com/products/downloads/FTSE_UK_Index_Series.pdf All companies with eligible securities are ranked by their full market capitalization according to their quoted equity capital.

At an annual review in June, companies whose full market capitalization is greater than 0.15% of the full market capitalization of the FTSE SmallCap index will be added to the FTSE All-Share Index, as long as they meet all other relevant FTSE eligibility criteria. Companies with market capitalization of less than 0.10% of the FTSE SmallCap Index are excluded from the FTSE All-Share Index and added instead 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.10)Retrieved 18 April 2016 http://www.ftse.com/products/downloads/FTSE_UK_Index_Series.pdf

This article contains general information and does not represent FXCM’s product offering or trading advice.

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