How to invest in FTSE 100 index funds in 2024

This page explains how to invest in the FTSE 100 index. Learn the different ways you can invest and find some popular Footsie index funds and ETFs to get started with.
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Updated: Nov 15, 2023
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The FTSE 100 index consists of the 100 largest UK-listed blue chip companies traded on the London Stock Exchange. Investing in the FTSE 100 provides exposure to Britain’s leading corporations across a wide range of industries and economic sectors.

The Financial Times 100 Index is the definitive benchmark for the UK equity market. This page will explain everything you need to know about the FTSE 100, from what companies are included to how everyday investors can gain exposure through low-cost index funds and ETFs.

You’ll learn key factors like historical returns, volatility, sectors and weightings, dividend yields, and expert predictions on its future. Whether you are looking to invest in the FTSE 100 short or long-term, this guide provides a comprehensive breakdown of how to get started and helps you invest in the United Kingdom’s premier blue-chip index.

Where can I invest in the FTSE 100 index?

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According to our expert research, Plus500 is the best ETF broker to invest in FTSE 100 index funds. 

Both FTSE 100 ETFs and FTSE 100 CFDs are available to invest in through Plus500 .

Here are three more places to buy the FTSE 100, ranked according to their cost, security, and features.

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1
Min. Deposit
100 €
Best offer
User Score
9.9
Trade +2000 CFDs on Shares, Options, Commodities & more
Unlimited risk-free Demo Account
0 commissions & attractive spreads with up to 1:5 leverage
Start Trading
Payment Methods:
Bank Transfer, Debit Card, PayPal, Credit Card, Visa, Mastercard, American Express, Trustly, Apple Pay, Google Pay, Discover, Bank Transfer: SEPA, Bank Transfer: FPS, skrill
Full Regulations:
ASIC, FCA, FSA, MAS, CySEC #250/14

Buy or sell stock CFDs with Plus500. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

2
Min. Deposit
0 €
Best offer
User Score
9.9
TastyTrade allows you to buy and sell U.S. stocks without paying any commission fees.
Whether you’re a short-term trader or a long-term investor, TastyTrade accommodates various investment horizons.
Explore over 8,000 U.S. stocks and consider exchange-traded funds (ETFs) for broader exposure to the market.
Start Trading
Payment Methods:
Wire Transfer, Check, ACH
Full Regulations:
3
Min. Deposit
0 €
Best offer
User Score
9.9
Allows commission-free trading of individual stocks and over 2,000 ETFs.
TradeStation’s platform supports options, futures, and futures options trading.
Traders benefit from award-winning software with advanced analysis capabilities and customization options.
Start Trading
Payment Methods:
Wire Transfer, Check, ACH
Full Regulations:

How to invest in the FTSE 100 index? A step-by-step guide

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The easiest way is to sign up to a stock broker, open an investment account, and buy shares in an FTSE 100 ETF or CFD. This guide explains how to do it:

Step 1. Sign up to Plus500

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We recommend using Plus500 to invest in FTSE 100. Sign up for a share dealing platform or brokerage account and deposit some money. You may need to supply a form of photo ID to verify your investing account.

1
Min. Deposit
100 €
Best offer
User Score
9.9
Trade +2000 CFDs on Shares, Options, Commodities & more
Unlimited risk-free Demo Account
0 commissions & attractive spreads with up to 1:5 leverage
Start Trading
Payment Methods:
Bank Transfer, Debit Card, PayPal, Credit Card, Visa, Mastercard, American Express, Trustly, Apple Pay, Google Pay, Discover, Bank Transfer: SEPA, Bank Transfer: FPS, skrill
Full Regulations:
ASIC, FCA, FSA, MAS, CySEC #250/14

Buy or sell stock CFDs with Plus500. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Step 2. Decide how to buy the FTSE 100

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This boils down to choosing between an FTSE 100 ETF or CFD. Exchange traded funds  are generally better suited to investors who want to passively track the FTSE 100’s performance. CFDs offer a greater range of trading options: you can use leverage, short the index, or buy and sell it outside of trading hours.

Step 3. Invest in the FTSE 100

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Sign into your trading account and search for the FTSE 100. Hit the ‘buy’ button and enter the details of your purchase, such as how much you want to spend. Hit ‘buy’ again to execute the trade.

Step 4. Monitor your investment

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When you buy a CFD, the trade goes through more or less instantly, and you’ll be able to see your new open position in your trading account. ETF purchases can take longer, and if you buy outside of traditional trading hours it won’t go through until the next morning.

Your trading account will show the price change in the FTSE 100 since you bought it, so you can see your profit/loss at a glance. Use that information, along with your own research, to decide when to sell the FTSE 100 and close your position, ideally at a profit!

What is the FTSE 100 Index?

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The FTSE 100 Index represents the 100 companies with the highest market capitalisation listed on the London Stock Exchange. It is a share index of stocks tracking the performance of the 100 largest UK public companies by market cap that meets eligibility requirements.

The FTSE 100 offers a broad representation of the biggest, most valuable, and actively traded companies across many industries within the United Kingdom. The Footsie 100 is regarded as a reliable indicator of Britain’s economy overall. 

The index is owned and overseen by FTSE Russell and is reviewed quarterly in March, June, September and December. Companies can be added or removed depending on changing market caps and liquidity.

To be part of the FTSE 100 index, individual companies must meet specific criteria, which include: 

  • A company must rank in the top 100 by market cap on the London Stock Exchange (LSE) main market. 
  • Meet rules for foreign ownership restrictions. 
  • It cannot be a closed-end investment fund or life science company. 

How is the FTSE 100 calculated?

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Like other indexes, the FTSE 100 uses a market capitalisation-weighted index formula. This means that rather than averaging share prices; the FTSE 100 reflects the total market cap of component stocks relative to each other.

The bigger the market cap of stocks within the index, the greater their weighting and contribution to index performance. So, large multinationals have an outsized influence on the FTSE 100’s value.

What are the FTSE 100’s Trading Hours?

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The FTSE 100 index trades on the London Stock Exchange and operates between 8:00am to 4:30pm London time. The market is open Monday through Friday but is closed for holidays.

With the best CFD share trading platforms, you’ll be able to access after market hours and it is possible to trade the FTSE 100 24 hours from Sunday to Friday.

What are some other FTSE indices?

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In addition to the Footsie 100, the Financial Times Stock Exchange (FTSE) includes several other stock indices. Here’s a look at a few other FTSE indices:

  • FTSE 250 index. This index comprises the following 250 companies by market cap. 
  • FTSE 350 index. The FTSE 350 is made up of the FTSE 100 and FTSE 250. 
  • FTSE Small Cap. The small cap includes the 350th to 600th largest companies by market cap. This is a collection of small cap stocks. 
  • FTSE All Share. The FTSE All Share comprises all of the companies above. 

How has the FTSE 100 performed?

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The FTSE 100 has performed relatively well since it was launched in the 1980s. However, returns have been slightly lower compared to other indices, such as the S&P 500. For example, in 2023, the S&P 500 has traded approximately 20% higher, while the Footsie has lost around 6%.

Use the interactive tool below to learn more about the FTSE 100, what companies it includes, and the performance of its individual stocks.

The different ways to invest in the FTSE 100

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As we mentioned above, there are numerous ways to put your money into the FTSE 100. ETFs and CFDs are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.

Buy FTSE 100 ETFs

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An ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.

An FTSE 100 ETF is one way of investing in the FTSE 100. It’s simply an investment fund that mirrors the performance of the FTSE 100. When you buy shares in the fund, the value of your investment will rise or fall with the FTSE 100 itself. 

ETFs are ideal for new investors because they have a very low minimum investment. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the FTSE 100 index, because you can buy or sell shares in the fund throughout the day.

Examples of popular UKX ETFs

  • iShares Core FTSE 100 ETF (ISF)
  • Vanguard FTSE 100 ETF (VUKE)
  • HSBC FTSE 100 ETF (HUKX)

Invest in FTSE 100 index funds

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An index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the FTSE 100. It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.

However, there are a couple of differences. FTSE 100 tracker funds are only priced at the end of each trading day, so you can buy or sell shares in the fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in a FTSE 100 tracker fund.

That means an FTSE 100 mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue. Some FTSE 100 trackers are actively managed funds, which means the costs are higher than exchange traded funds.

Examples of popular Footsie index funds/mutual funds

  • Vanguard FTSE 100 Index Unit Trust (VAFTIGI)
  • HSBC FTSE 100 Index Fund (HCOIA)

Trade FTSE 100 CFDs

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Trading CFDs (contracts for difference) are a way to speculate on FTSE 100 price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the FTSE 100 – but it’s separate from it.

As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours and they’re popular for day trading.

All of this means FTSE 100 CFDs offer the potential to outperform a fund that passively tracks the FTSE 100’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders. Another option is spread betting, which offers a tax free way to trade the Financial Times stock exchange 100 index.

Trade FTSE 100 futures

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Futures contracts are agreements to buy or sell the UKX at an agreed price on a set date in the future. FTSE 100 futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.

Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.

Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the FTSE 100 then you might want to short the FTSE 100 so that you still make some money if the price falls.

Buy FTSE 100 shares

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Another way to invest in the FTSE 100 is to buy shares in the individual stocks that the index tracks. It isn’t practical to buy every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the FTSE 100 in order to get broad exposure to its performance.

The most heavily weighted stocks in the FTSE 100 tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.

One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.

For the FTSE 100 index, the largest stocks you might choose to invest in are:

CompanyIndex weight
Shell PLC (SHEL)8.36%
AstraZeneca PLC (AZN)7.76%
HSBC Holdings PLC (HSBA)5.95%
Unilever PLC (ULVR)5.17%
BP PLC (BP)4.34%
Diageo PLC (DGE)3.94%
Glencore PLC (GLEN)3.45%
British American Tobacco PLC (BATS)3.44%
Rio Tinto PLC (RIO)3.41%
GSK PLC (GSK)2.82%

The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.

How much does it cost to invest in the FTSE 100 index?

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From $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD, or share, plus the fees associated with it.

InstrumentTrading feeManagement fee
Exchange traded funds$0-$5.990-0.2%
Index fund / mutual fund$0-$5.990.1-2%
Individual stock$0-$3None
CFD$0None

*A fee comparison of 3 leading brokers for example purposes

ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds, mutual funds, and tracker funds have low fees but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.

All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars. 

Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.

Should I invest in the FTSE 100 index? 

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Yes, FTSE 100 investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It gives you an instantly diverse portfolio with exposure to a broad area of the stock market and some of the best stocks on the London Stock Exchange.

The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The FTSE 100 is better suited to hands-off investors focused on long term investing, compared to those who have the skills, experience, and desire to pick their own stocks.

What are the advantages of investing in the FTSE 100 index?

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An index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the FTSE 100 index:

  • A convenient way to invest in the UK economy. The FTSE 100 is made up of companies that operate in the United Kingdom. It offers an easy way to invest in the country as a whole. Many of the stocks on the FTSE have large market capitalisation, often in the billions.
  • Get a ready-made, diversified, managed portfolio of UK stocks. Companies from lots of different industries list on the FTSE 100. When you invest in a passive fund, you immediately have a portfolio that includes shares in sectors like pharmaceuticals, finance, oil and gas, and many more. This protects you against failures in one area of the economy.
  • It’s cheaper to invest in a FTSE 100 ETF compared to buying lots of individual stocks. A single stock in a company like Shell, Unilever, or AstraZeneca can be quite expensive, while a share in a FTSE 100 ETF is much more affordable.
  • Many UK companies operate around the world. FTSE 100 companies are some of the largest in the world and many of them generate much of their revenue from outside of the UK. A company like HSBC, for example, has a large presence in Asia, and investing in the FTSE 100 gives you access to lots of companies like this, so it’s less impacted by the fluctuations of the UK economy.
  • The FTSE 100 includes large companies with a track record of success. The FTSE 100 includes the largest 100 companies in the UK. All of these businesses have been around a while, and the strict qualification criteria means they’re relatively safe to invest in.
  • Lots of FTSE 100 companies pay dividends. The FTSE 100 is dominated by companies in finance, energy, and pharmaceuticals, industries which tend to pay out dividends on a regular basis. Investing in the FTSE 100 gives you access to these dividends, which can help to grow your investment budget over time through regular income payments.

What are the disadvantages of investing in the FTSE 100 index?

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The main risk of investing in the FTSE 100 is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of FTSE 100 investing.

  • The FTSE 100 is UK-focused. Investing in the FTSE 100 provides diversity across different industries and various sectors, but it doesn’t provide a huge amount of geographical diversity. The performance of the FTSE 100 is tied to the UK economy, even if many of its companies generate revenue from overseas.
  •  No way to ”beat the market”. The performance of the FTSE 100 is the barometer by which portfolio performance is judged. By investing in the index, you can’t beat it, so your gains are more limited than they would be otherwise (so too are your losses, of course).
  •  You can’tcan’t pick your own stocks. Investing in an index means giving up the opportunity to pick individual shares. You may not want to invest in all the companies in the FTSE 100, but you don’t have the option to pick and choose.
  • Costs can be higher when using an actively managed fund. Some FTSE 100 index funds are overseen by a fund manager. This means the investment portfolio is built based on the manager’s investment strategies. When using an actively managed fund, you’ll have slighter higher costs. 

FTSE 100 predictions from expert analysts

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Insights from stock market analysts can give you an idea of the overall sentiment towards the FTSE 100. It may help you see things from a different perspective, or pick up things you may have missed. Here are some FTSE 100 forecasts and insights from leading experts:

The dominant theme as the FTSE 100 grinds higher seems to be that ‘better times are coming”

Russ Mould, AJ Bell

The main sectors of the UK’s large cap index are having their day in the sun compared to the previous decades which have seen these sectors trailing (…) the high flying growth sectors which have predominantly been the preserve of the US market”

James Penny, TAM Asset Management

An abundance of defensive sectors like oil, defence and tobacco has helped performance”

Lee Wild, interactive investor

Bottom line

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The FTSE 100 index is an excellent way for investors to gain exposure to the largest companies in the United Kingdom. With multiple ways to buy, trade, or invest in the Footsie, accessing the best shares has never been easier. To get started, you’ll need to use a trusted online share trading platform where you can access a range of FTSE 100 tracker funds, ETFs, stocks, or CFDs.

Invest in the FTSE 100

FAQs

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Should I invest in the FTSE 100 through an index fund or ETF?
How should a beginner invest in the FTSE 100?
Can I invest in the FTSE 100 from the UK?
Does the FTSE 100 pay dividends?
Which FTSE 100 fund is best?
How is the FTSE 100 calculated?
Why is the FTSE 100 considered a benchmark?
How have FTSE 100 returns been over the long term?
How do FTSE 100 tracker funds work?
What are the tax implications of investing in FTSE 100 funds?
How can I invest directly in the FTSE 100?

Risk disclaimer
James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.
Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.