Financial Times Actuaries Ail-Share Index

3 key takeaways

• The FTSE All-Share Index includes large, mid, and small-cap companies listed on the London Stock Exchange.
• It serves as a comprehensive measure of the overall performance of the UK equity market.
• The index is widely used by investors and fund managers as a benchmark for UK investments.

What is the Financial Times Actuaries All-Share Index?

The Financial Times Actuaries All-Share Index, now commonly known as the FTSE All-Share Index, is a prominent stock market index that tracks the performance of companies listed on the main market of the London Stock Exchange (LSE). Introduced in 1962, it includes a broad spectrum of companies, encompassing large, mid, and small-cap stocks. The index is considered one of the most comprehensive indicators of the UK equity market’s overall performance.

The FTSE All-Share Index is market capitalization-weighted, meaning that companies with larger market capitalizations have a greater influence on the index’s performance. This weighting method ensures that the index reflects the relative size and impact of each company within the broader market.

Components and calculation

The FTSE All-Share Index includes around 600 to 700 of the LSE’s eligible companies, representing approximately 98% of the UK’s market capitalization. The index is divided into three segments based on company size:

• FTSE 100: The 100 largest companies by market capitalization.
• FTSE 250: The next 250 largest companies after the FTSE 100.
• FTSE SmallCap: Companies that are smaller than those in the FTSE 350 (FTSE 100 + FTSE 250) but still meet certain criteria.

The index is calculated in real-time and its value fluctuates with the share prices of its constituent companies. The performance of the FTSE All-Share Index is closely monitored by investors and fund managers, as it provides a broad view of the UK stock market’s health and trends.

Importance and usage

The FTSE All-Share Index is an essential tool for investors, fund managers, and analysts. It serves several important functions:

• Benchmarking: The index is commonly used as a benchmark to evaluate the performance of UK-focused investment portfolios and funds. Comparing a portfolio’s returns to the FTSE All-Share Index helps investors understand how well their investments are performing relative to the overall market.
• Market analysis: The index provides a comprehensive view of the UK stock market, helping investors analyze market trends, sector performance, and economic conditions.
• Investment decisions: By tracking the FTSE All-Share Index, investors can make more informed decisions about asset allocation, stock selection, and risk management.

Historical performance

The FTSE All-Share Index has a long history, providing valuable data on the performance of the UK equity market over time. It has experienced various market cycles, including periods of significant growth and downturns, reflecting the broader economic environment. Long-term investors use this historical data to understand market trends and to develop investment strategies based on past performance and future expectations.

Related topics

To deepen your understanding of stock market indices and their implications, consider exploring these related topics:

• FTSE 100 Index: A closer look at the index comprising the 100 largest companies on the London Stock Exchange.
• Stock Market Indices: An overview of different indices worldwide and their roles in financial markets.
• Investment Strategies: Techniques and strategies used by investors to achieve their financial goals.
• Market Capitalization: Understanding how the size of a company is measured and its importance in index calculations.

The FTSE All-Share Index is a vital indicator of the UK equity market’s health and performance, offering comprehensive insights for investors and financial professionals. Exploring these related topics can provide a broader perspective on the function and significance of stock market indices.