The Footsie’s
fi rst 25 years
EXECUTIVE SUMMARY
• The FTSE 100 was introduced on the
fi rst trading day of 1984, primarily as
a real-time index for use by the
derivative markets.
• At its launch the 100 constituents
represented approximately 71% of
the UK’s equity market capitalisation
– today, it is 88%.
ANS
• The yield ratio for the index has
decreased over time but the ‘sell
THAN EV
in May and go away’ adage still
holds true.
© JONA
Adrian FitzGerald, ASIP, charts the turbulent
wider family of indices that measure UK
history of the FTSE 100 index from its birth a
stock-market performance. Additional
quarter of century ago, and suggests that
members include the FTSE 250,
representing the next 250 largest
investors can learn a lot by studying its past
companies, the FTSE SmallCap and the
FTSE Fledgling index. Th e FTSE
BY: ADRIAN FITZGERALD, ASIP
All-Share index, which remains the key
benchmark index for standard portfolio
O
n January 3, 2009, the monthly) was 10.1%. Expressed in real measurement and which has been
FTSE 100 index was 25 terms, these performances fall to 2.4% calculated since April 1962, embraces all
years old, but it was no and 6.3% respectively. the constituents of the FTSE 100, 250
cause for celebration. Th e and SmallCap indices.
index turned in its worst annual THE BACKGROUND FTSE International – a joint venture
performance, down 31.3%, and closed Th e FTSE 100 was introduced on the between the Financial Times and the
in 2008 more than 36% below its peak fi rst trading day of 1984, primarily as a London Stock Exchange – is responsible
nine years earlier. real-time index for use by the derivative for the operation of the FTSE 100 and
Investors have indeed had a bumpy markets. It measures the weighted- the other FTSE Actuaries UK Share
ride since it began, as tables 1 and 2 average performance of the largest 100 indices (and over 120,000 indices in
show: average annual capital UK quoted companies and is reviewed total worldwide). A FTSE policy group
performance was 6.1%; average annual quarterly. While the index receives the and regional committee, membership of
total return (income reinvested most media attention, it is just one of a which is representative of users of the
42 SUMMER 2009
42-4742-47 FTSE.indd 42FTSE.indd 42 1/6/091/6/09 12:07:1412:07:14Professional Investor Summer 09.44 44 4/6/09 15:41:02
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