The FTSE 100 and Dow Jones are stock market indices that track overall market performance. The FTSE 100 is made up of the largest stocks on the London Stock Exchange (LSE). The Dow Jones is made up of 30 large cap US stocks. But the FTSE 100 and Dow Jones differ in value, size, diversification and the way stocks are picked.
What’s the difference between the FTSE 100 and Dow Jones?
The FTSE 100 is a collection of the largest 100 stocks on the LSE by market capitalization, which is the current stock price multiplied by the number of stocks outstanding. The Dow Jones tracks 30 large-cap, blue chip US stocks. It’s price weighted, so stocks with higher prices have a greater impact on the index.
The “bigger” index could be the one that tracks a greater number of stocks or the one that tracks stocks with a higher total market capitalization. The FTSE 100 tracks 70 more stocks than the Dow Jones.
FTSE 100 vs Dow Jones: Which is worth more?
The FTSE 100 has a market cap of just £1.996 trillion (around $3.17 trillion CAD), against Dow Jones’ market cap of $10.35 trillion USD (around $13.88 trillion CAD). The company with the largest weighting in the Dow Jones is UnitedHealth, which has a market cap of $463 billion ($621 billion CAD). The largest weighting in the FTSE 100 is Shell, with a market cap of £177 billion ($281.3 billion CAD).
FTSE 100 vs Dow Jones: Which is more diversified?
The FTSE 100 is slightly more diversified, because it tracks more stocks than the Dow Jones and is fairly evenly distributed across different sectors. That being said, it’s slightly weighted towards financial services and consumer staples stocks. Meanwhile, the Dow Jones currently leans more towards technology and financial services stocks, although this could change over time.
If you’re looking for global diversification, consider investing in funds that track companies listed in both indices.
Platforms that let you invest in US and international stocks
These trading apps allow you to invest in companies within the indices or funds/ETFs that hold stocks in companies included in the FTSE 100 and Dow Jones.
The Dow Jones has historically performed better than the FTSE 100, although this doesn’t guarantee that it always will. As it’s only got 30 stocks, the Dow Jones wouldn’t create as much diversification as you might be looking for in an investment, while the FTSE 100 has plenty of diversification available.
There’s also no reason why you couldn’t invest in both, which would give you a diverse set of stocks, including some stocks from across the globe.
What are the top holdings in the Dow Jones and FTSE 100?
Dow Jones
FTSE 100
Apple
AstraZeneca
Microsoft
Unilever
UnitedHealth
Diageo
Visa
GlaxoSmithKline
How to invest in the Dow Jones and FTSE 100
Find a FTSE 100 or Dow Jones ETF or mutual fund. Some index funds track the performance of all stocks on the index, whereas others only track a certain number of stocks or are weighted towards specific stocks. You should select the fund that best suits your investment goals.
Open a stock trading account. To invest in ETFs or mutual funds, you’ll need to open a trading account with a broker or trading platform. Keep in mind that some index funds may only be available on certain brokerages or platforms. The providers in our comparison table let you invest in Canadian and international stocks. Some of the index funds above are listed on the Toronto Stock Exchange (TSX).
Deposit funds. You’ll need to deposit funds into your account to begin trading. You may need to pay a foreign conversion fee to convert your Canadian dollars into US dollars, so you can buy US stocks.
Buy the index fund. Once your money has been deposited, you can buy the index fund. Most ETFs or index funds come with a small annual fee to cover fund management expenses.
Bottom line
The Dow Jones can give you access to some big players in the US, with the combined market capitalisation of the 30 companies listed outweighing the entire FTSE 100. Investing in the Dow Jones would give you a high proportion of technology stocks, with 20% of the index in this sector.
Meanwhile the FTSE 100 hasn’t performed quite so well, but it would give you more diversification.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
Zoe was a senior writer at Finder specialising in investment and banking, and during this time, she joined the Women in FinTech Powerlist 2022. She is currently a senior money writer at Be Clever With Your Cash. Zoe has a BA in English literature and a Diploma for Financial Advisers. She has several years of experience in writing about all things personal finance. Zoe has a particular love for spreadsheets, having also worked as a management accountant. In her spare time, you’ll find Zoe skating at her local ice rink.
A failed SPAC deal pulled the plug on this vertical farming company’s plans to go public. But you can buy stock in other sustainable farming companies.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Advertiser Disclosure
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
