The FTSE 100 is made up of the largest, publicly listed 100 companies in the UK. The Dow Jones is the top 30 in the US, the likes of McDonalds, Coca Cola, Apple, Microsoft, Boeing and Disney. Whilst giving a good insight into how larger companies are performing, they do not ‘drill down’ to all ‘walks in life’.
The S&P 500 is clearly the top 500 US companies and the FTSE 250 is the next 250 largest companies in the UK and perhaps both give a better handle on how the economy is performing. Looking even wider there is the FTSE 350 and the FTSE All Share (the top 1,000 companies).
These give us a better view of life and the companies that we buy goods and services from.
The FTSE 100 includes constituents such as Aviva, L&G, Barclays, Lloyds, NatWest, BT, JD Sports, Just East, Next , Sainsbury’s, Tesco and Vodafone. When you include FTSE 250 constituents such as airlines, more finance groups, construction, brewers, cars etc. Examples of which are Aston Martin, Britvic, Carnival Cruises, Centrica, Cineworld, Direct Line, Games Workshop, Greggs, Homeserve, M&S, Morrisons, Pets At Home, Rank Group, Royal Mail, Tate & Lyle, Trainline, Virgin Money, Worldwide Healthcare and Watches of Switzerland.
You can see, despite not mentioning all firms, that the coverage is across many areas of our lives and better reflects how the economy is doing given that many FTSE 100 firms mainly trade overseas whereas FTSE 250 and FTSE 350 companies have a more UK focused customer base.
This is why we are now including the S&P 500 and the FTSE 250 in our weekly Traffic Light Alerts.