The London Stock Exchange is one of the most prominent stock markets in the world, and as with every exchange, the LSE has a number of indices to show how the UK stock market is performing. The main one of these is the Financial Times Stock Exchange 100 (FTSE 100). You can call it the Footsie – everyone does.
As the name suggests, the FTSE 100 takes the 100 companies with the biggest market capitalisation on the LSE and indicates how they are doing, both individually and as a whole. So, while it doesn’t cover all the companies on the LSE, it does reflect the performance of the most prominent – which serves as a reliable indicator of the state of UK corporate dynamics.
That’s exactly what you need – to get an idea of the state of the market so that you can make informed investment decisions. And what’s more, the Footsie isn’t just useful for knowing how the largest UK companies are doing – you can also invest in it, just as if it was any other stock.
Investing in the Footsie can be much easier than picking stocks individually, since each corporation will have its own particular dynamics and idiosyncrasies, even if it conforms to the overarching trend of the market. So looking at the main market trend, as represented by the Footsie, can save you time and headaches.
This makes tracking and analysing the LSE quite easy, so that if you don’t feel like digging into the specifics of a particular stock, you can simply choose to place your bet on the FTSE 100.
How has the Footsie been doing recently?
From the highs of around 7,500 points that the Footsie was enjoying a year ago, the index tumbled to just 5,000 – wiping out a third of its value. You know the reason: the virus hit hard. Some businesses failed to recover, and many were so damaged they aren’t expected to recover fully until 2022 at the earliest. So we have not yet seen the Footsie recover to its highs from last year.
Now, just to put things into perspective, the US stock exchange has its “best of the best”, index too. The S&P 500 is to the American corporate world roughly what the FTSE 100 is to the UK. Interestingly, FTSE100 companies pay out a larger fraction of their earnings as dividends than S&P500 firms. Comparing one to the other, you may notice that the S&P has already passed its pre-virus highs while the Footsie is still on its way back uphill. That suggests that UK stocks suffered more on account of the virus than US stocks, and have yet to recover fully.
But of course, even if your portfolio was increasing in value, you still wouldn’t be just sitting there idly. You’d be studying, discovering, and exploring – and Orca makes that so enjoyable and easy, with everything clearly explained and highlighted throughout the app, and our friendly 24/7 in-app chat ready to help you out.
It’s important to mention that ETFs like FTSE100 are a long-term play. You may feel the effect of dividends over a long period of time, as it is unlikely to change dramatically over one year.
How to invest in the FTSE 100 with Orca
Investing in the Footsie is not only easy, but there are options for how to do it. Type FTSE 100 into the search bar, and you’ll see all the specific sectors of the FTSE available for your investment. Choose, diversify, invest – Orca gives you all you need for your investment maneuvers.
You can invest in the FTSE with Orca right now.
Remember that your capital is at risk and past performance is no guide to future returns.