To understand what the FTSE100 is, it is worth understanding what a share index is first. Essentially an index is a list of companies’ share prices that are grouped together due to one or many similar characteristics. An index collates the prices of all the shares in the index and provides a single value for the total change in the shares as a whole. Indexes are used to gauge the overall sentiment of a market or sector as they provide a combined overview of large groups of shares.

The FTSE100 index, or just ‘Footsie’ is a share index of the 100 largest companies with shares trading on the London Stock Exchange. The companies that make up the FTSE100 are also sometimes referred to as blue chips which is defined by Merriam Webster as a share ‘of high investment quality that usually pertains to a substantial well-established company and enjoys public confidence in its worth and stability.’ Generally the companies in the FTSE100 are well known and recognisable.

Best known shares in the index include Royal Dutch Shell, Rolls Royce, HSBC, Marks and Spencer, GlaxoSmithKline and Unilever.

This article does not constitute advice. The value of your investment and the income derived from your portfolio is not guaranteed and can go down as well as up.