The FTSE 350 Index (INDEXFTSE: NMX) is a market capitalisation weighted index. It comprises the constituents of both the FTSE 100 and FTSE 250 indices, effectively tracking the 350 largest companies listed on the London Stock Exchange (LSE).
History
The FTSE 350 was introduced in 1983 by the Financial Times Stock Exchange (now known as FTSE Russell), a global index provider. It was created to complement the FTSE 100, which comprises the UK’s 100 largest publicly traded companies.
How is the FTSE 350 Calculated?
The FTSE 350 is a market capitalisation weighted index, meaning that companies with higher market capitalisations exert a greater influence on its movements. Market capitalisation is calculated by multiplying a company’s share price by the total number of its outstanding shares.
The index is reviewed quarterly to ensure that it accurately reflects changes in the UK stock market. Companies may be added to or removed from the index based on fluctuations in their market capitalisations and overall standings.
FTSE 350 Biggest Companies
Here are some examples of the leading companies within the FTSE 350 Index, representing a diverse range of industries:
- Mitie Group plc: A British outsourcing and maintenance company.
- Rio Tinton plc: a British-Australian multinational company that is the world’s second-largest metals and mining corporation.
- Hiscox Ltd: A diversified international insurance group offering property and casualty insurance aimed at companies and high-net-worth individuals.
- Diageo plc: A British multinational alcoholic beverage company.
Beyond The FTSE 350
The FTSE 350 Index provides a valuable window into the performance of the biggest companies listed on the London Stock Exchange. However, for a more comprehensive picture, it’s worth exploring other indices that also include smaller companies.
FTSE All-Share Index: This index tracks the performance of all listed companies on the London Stock Exchange main market. It provides a broad representation of the UK stock market, encompassing large, mid, and small-cap companies listed on the main market, but excludes companies on the AIM market.
FTSE AIM All-Share Index: This index specifically focuses on the Alternative Investment Market (AIM). It tracks the performance of all companies listed on the AIM market, which caters to smaller and growing businesses. The FTSE AIM All-Share offers a separate way to gauge the performance of the AIM market compared to the FTSE Small Cap, which includes some companies listed on the main market.
Frequently Asked Questions
What is the difference between the FTSE 350 and the FTSE All-Share Index?
The key difference between the FTSE 350 and the FTSE All-Share Index lies in the number of companies they track and their representation of the UK stock market:
FTSE 350: Tracks the 350 largest and most liquid companies listed on the London Stock Exchange. It focuses on large-cap and mid-cap companies, offering a snapshot of the performance of these bigger players.
FTSE All-Share Index: Tracks a much broader spectrum, including almost all eligible companies (around 600 out of 2,000+) listed on the LSE. It captures companies of all sizes, from large-cap giants to smaller companies, aiming to represent nearly 98% of the total market capitalisation of the UK stock market.
How to Trade or Invest in the FTSE 350?
There are several approaches to gaining exposure to the FTSE 350: indirect investment through instruments that track the index, direct investment in the underlying companies or speculating on index movements through spread betting or CFDs.
Indirect Investment:
Exchange-Traded Funds (ETFs): These are the most common way to invest in the FTSE 350. ETFs are funds that track a basket of assets, in this case, the companies within the FTSE 350. Buying an FTSE 350 ETF allows you to diversify your portfolio across the index with a single purchase. There are various FTSE 350 ETFs available, so research their fees and specific holdings before choosing one.
Index Funds: Similar to ETFs, some index funds track the FTSE 350. These funds are typically passively managed, meaning they aim to mirror the performance of the index. Index funds generally have lower fees compared to actively managed funds.
Direct Investment:
Stock Picking: You can directly invest in the stocks of individual companies listed on the FTSE 350. This requires research and analysis to choose companies that align with your investment goals and risk tolerance. Remember, the FTSE 350 represents 350 companies, so diversification is still important within this approach.
Trading with Leverage:
Spread Betting: This involves speculating on the price movements of the FTSE 350 index or individual companies within it. You don’t own the underlying asset but instead agree a contract with a spread betting provider on whether the price will go up or down. Profits and losses are based on the difference between the entry and exit price, magnified by the leverage offered by the provider.
CFDs: Similar to spread betting, CFDs are contracts that track the price movements of an underlying asset, in this case, the FTSE 350 or its constituents. You can go long (buy) or short (sell) a CFD, profiting if the price moves in your favour. CFDs also involve leverage, amplifying both potential gains and losses.
