First week back and like many people I’ve been catching up with paperwork and numerous spam emails that had dropped into my email box between Christmas and New Year.
I read and article yesterday and whilst watching the news late last night, I wondered why there is so most emphasis put on the FTSE 100. The FTSE 100 is the top 100 shares listed on the London Stock Exchange in term of capitalisation i.e. size
Here are a few facts about the FTSE 100.
The index is dominated by a number of big sectors. These include:
- Oil and Gas 20% of the index
- Basic Resources 14.5%
- Financial and Banks 11%
Obviously the performance of these three sectors will dictate how well the index performs overall.
Top ten holdings as at June 2011 were:
- HSBC Hldgs
- Vodafone Group
- Royal Dutch Shell
- Rio Tinto
- Royal Dutch Shell B
- British American Tobacco
- BHP Billiton
- BG Group
The ten largest Blue Chip Companies account for over 45% of the total FTSE 100 index. With such a concentration on 3 sectors it is easy to understand how the index can change show rapidly. The News always refers to the FTSE 100. This usually happens when the index drops, as large increases are generally not news-worthy.
The FTSE 100 was down 6% over the twelve months in 2011, and the FTSE all share was down 7.3% over the same period.
To get diversification into any equity based investment, investors might consider investing outside of the UK. For example if a client invested into a global index such as the Vanguard Developed World (Ex UK) index then the investor would have seen less of a loss over the same period ( approx -0.3%).
This demonstrates the benefits of using a broad diversified approach to investing. Clients should consider Equities, Bonds, Cash, Property and alternative investments as part of their investment portfolio.
To find out more about our investment services and how we can help you why not contact us.