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FTSE 100, 250 and All-Share – what’s the difference?

We take a closer look at the major FTSE indices and the key differences between them.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

It’s no secret that the UK stock market has been unloved over the last few years. UK investors have had a tough time, from long-lasting Brexit negotiations, to market falls and dividend cancellations during the pandemic. Now we’re hit with rising inflation and the cost-of-living crisis spurred by tensions in Ukraine.

As investors continue to mull over UK opportunities, we’ve decided to go back to basics and take a closer look at the main UK stock market indices.

This article isn’t personal advice. If you’re not sure if an investment is right for you, ask for financial advice.

The FTSE indices

As the home to the UK’s largest companies, the FTSE 100 attracts headlines in the UK. But with hundreds of smaller and medium-sized companies offering unique products and services both here and abroad, there’s more to our home market than first meets the eye.

FTSE 100

The FTSE 100 is probably most well-known to UK investors. It measures the performance of the 100 largest companies traded on the London Stock Exchange (LSE). It’s by far the most widely used UK stock market indicator, featuring big names like BP, AstraZeneca, HSBC and GlaxoSmithKline.

Lots of these companies don’t only carry out business or sell their products and services in the UK. They’re recognised on the global stage too. This means they’re impacted by currency movements, global policies and trends, particularly in the US and Europe.

Key points for investors:

  • Made up of the UK’s 100 largest companies
  • Affected by currency fluctuations from companies earning money abroad
  • Currently has a high concentration in sectors like energy and healthcare
  • Current annual dividend yield of 3.41% per year

Remember, yields are variable and not guaranteed.

Performance

With dividends reinvested, the FTSE 100 has grown 222.62% in the last 20 years. This would’ve turned an initial investment of £10,000 into £32,262.

Jun 17 -
Jun 18
Jun 18 -
Jun 19
Jun 19 -
Jun 20
Jun 20 -
Jun 21
Jun 21 -
Jun 22
FTSE 100 TR 8.73% 1.56% -13.80% 18.01% 5.76%

Past performance isn’t a guide to future returns. Source: Lipper IM to 30/06/2022.

FTSE 250

The FTSE 250 is made up of the next biggest 250 companies after the FTSE 100, also known as medium-sized companies. These are thought to have more potential to grow because they’re usually seen to be more innovative or nimble. But this can come with greater risks as they can be more volatile.

Companies in the FTSE 250 tend to be more UK focused than the FTSE 100, as they carry out more of their business in the UK than abroad. For that reason, this index is considered a better indication of the health of the UK economy versus the FTSE 100.

It includes household names like easyJet, Greggs, J D Wetherspoon and ITV. That said, there are also companies that earn their money overseas too.

The FTSE 250 could be a good option for investors looking to rely more on how the UK is doing as a whole.

Key points for investors:

  • More UK focused
  • Made up of companies with higher potential to grow
  • Can be riskier as it’s more volatile
  • Current annual dividend yield of 2.52% per year

Remember, yields are variable and not guaranteed.

Performance

With dividends reinvested, the FTSE 250 has grown 483.91% in the last 20 years. This would’ve turned an initial investment of £10,000 into £58,391. While these numbers might look impressive, this market is more volatile, and investors can experience more significant setbacks when these stocks are out of favour.

Jun 17 -
Jun 18
Jun 18 -
Jun 19
Jun 19 -
Jun 20
Jun 20 -
Jun 21
Jun 21 -
Jun 22
FTSE 250 TR GBP 10.57% -3.82% -9.97% 33.44% -14.59%

Past performance isn’t a guide to future returns. Source: Lipper IM to 30/06/2022.

FTSE All-Share

The FTSE All-Share is made up of the FTSE 100, FTSE 250 and FTSE Small Cap. As the name suggests, the FTSE All-Share index includes large and medium-sized companies, as well as much smaller companies – the 351st to 600th next largest companies on the LSE. The broad range of companies means the FTSE All-Share captures around 98% of the UK’s market.

The FTSE All-Share index could be a good option for investors looking to try and track the entire UK stock market. It offers a lot of diversification as it’s made up of around 600 stocks.

While diversified, it’s still heavily weighted to larger companies, like those featured in the FTSE 100. Bigger companies make up a more significant proportion of the index, so have more of an impact on the overall performance.

Key points for investors:

  • More diversification, with around 600 companies
  • An easy option for those looking to track the entire UK market
  • Heavily invested in larger stocks, meaning performance is similar to the FTSE 100
  • Current annual dividend yield of 3.27% per year

Remember, yields are variable and not guaranteed.

Performance

With dividends reinvested, the FTSE All-Share has grown 252.11% in the last 20 years. This would’ve turned an initial investment of £10,000 into £35,211.

Jun 17 -
Jun 18
Jun 18 -
Jun 19
Jun 19 -
Jun 20
Jun 20 -
Jun 21
Jun 21 -
Jun 22
FTSE All-Share TR 9.02% 0.57% -12.99% 21.45% 1.64%

Past performance isn’t a guide to future returns. Source: Lipper IM to 30/06/2022.

What does this mean for investors?

Investments that track indices like the FTSE 100, 250 and All-Share can be great, easy, and low-cost ways to invest. But when building and reviewing your overall portfolio it’s important to know the similarities and differences between any indices, and what they actually offer.

In the UK’s case, the FTSE 100 lets you invest in the UK’s largest 100 companies, while giving you a bit of a global twist. You’ll usually find the best yield of the three here, though that’s not guaranteed.

The FTSE 250 is more UK focused. These companies could potentially grow quicker, but could be a bit riskier.

The FTSE All-Share gives you a broad exposure to the whole of the UK market from small to large companies.

They all seem pretty different, right?

Well, the FTSE 250 certainly offers you something different from the FTSE 100 and All-Share. But while the FTSE 100 and All-Share offer good opportunities for investors to diversify across a broad range of shares, they give you something very similar. Both indices are mainly made up of the same gigantic companies, so performance between the two hasn’t usually been that different.

The point here is to always look a bit deeper. Just because they’re different indices doesn’t mean they’re completely different in the way that they’ll behave.

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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