How to invest in the FTSE 100

Find out about the UK's most famous stock index and how you can invest in it.

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6 January 2023: The FTSE 100 continued its strong start to 2023. On Thursday the FTSE closed higher as traders turned to the index to avoid tech stocks. Britain's premier share index closed up by around 57 points, or 0.76%, at 7,642. Winning sectors included retailers, airlines and banks. The biggest winner for the day was Next, who's shares Jumped 7.5%.

29 December 2022: The FTSE traded lower as European natural gas prices fell to pre-Ukraine war levels. In London, the FTSE 100 fell 0.6% after opening, while the CAC tumbled 0.5% in Paris, and the DAX was 0.3% lower in Frankfurt.

16 December 2022: The FTSE 100 extends its falls as oil prices slide and concerns over economic growth mount. The decline of the FTSE broadly reflects heavy losses in the US and Asia as global economies react cautiously to US interest rates rises. Markets are concerned that the rise in rates could push the global economy into recession.

Even if you’re new to investing, you’ve probably heard of the FTSE 100 – the UK’s best-known stock market index. Find out why it’s popular with investors in the UK and worldwide, which stocks make up the FTSE 100, and how you can invest in it.

What is the FTSE 100?

The Financial Times Stock Exchange 100 (FTSE 100 for short, which is pronounced “footsy”) is a stock market index comprising the 100 largest companies on the London Stock Exchange (by market capitalisation). This includes companies such as Barclays, BP, HSBC and Sainsbury’s.

Can you invest in the FTSE 100?

You may hear investment experts talk about investing in the FTSE 100, so it’s easy to make the assumption that it is an investment fund. But it’s actually an index. Think of an index as a hypothetical portfolio, designed to monitor the performance of the assets it contains (in this case, stocks in large UK companies). As such, you can’t actually invest directly in the FTSE 100.

However, you can gain exposure to FTSE 100 companies by either buying shares in each individual company or by investing in a fund – such as an exchange traded fund (ETF) – that tracks the performance of the stocks in the FTSE 100.

Why should you invest in the FTSE 100?

Zoe Stabler

Finder expert Zoe Stabler answers

Investing in the FTSE 100 tends to be regarded as a relatively safe and low-risk bet – insofar as investing is ever “safe and low-risk”. No investment is risk-free.

Because it’s made up of the UK’s biggest companies, the FTSE 100 tends to include businesses that have been around a while. Companies that have a track record of solid performance. This might mean they’re not the most exciting (or potentially most rewarding) companies to invest in, but the chances of them crashing are also lower than average. All of this makes the FTSE 100 a decent bet if you want to manage your risk levels. Plus, if you opt to buy shares, many FTSE 100 stocks pay dividends.

As we always bang on about, though, it’s essential to have a diverse investment portfolio. So, while a FTSE 100 tracker fund will likely feature in many investors’ portfolios, there’s no need to put all your eggs in one basket. There’s nothing stopping you from investing in the FTSE 100, while also bolstering your portfolio with an even lower-risk investment (such as bonds) and a selection of higher-risk, higher-reward assets.

Ways to invest in the FTSE 100

There are a couple of ways to invest in the FTSE 100:

  • Buy FTSE 100 stocks directly. You can buy individual stocks from the FTSE 100 index using a brokerage or share trading platform. You could buy one share of each company to create your own portfolio of FTSE 100 stocks, or buy shares in selected companies.
  • Invest in a FTSE 100 index fund or ETF. If you want exposure to all the companies in the FTSE 100 without having to buy individual shares (and avoiding trading fees), you could instead invest in a FTSE 100 fund or ETF. These track the performance of the stocks in the FTSE 100.

The FTSE 100 is made up of some really exciting companies, including Burberry, Coca-Cola and Ocado. Because of its appeal, there are lots of funds and ETFs that track the index.

Investors can also choose to invest in all the individual stocks themselves, but this would take a lot of time, especially as the index changes regularly. You would need to keep tabs on which stocks have moved out of the index, which have moved in, and whether any weightings need to be changed. An index fund would be a great deal easier and could save you money on commission too.

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Read our review of IG.

How to invest in the FTSE 100

  1. Open a share dealing platform. Whether you want to invest directly in FTSE 100 stocks or invest in a FTSE 100 ETF, you’ll need to open an account with a trading platform or brokerage.
  2. Fund your account. You need to put money in your account to buy shares or invest in a fund, either by bank transfer or using a debit card.
  3. Choose your investments. Either select an investment fund or, if you want to buy stocks, do some research into the companies you’re considering. Once you know what you want, find the stocks on your platform.
  4. Hit buy. It’s as simple as that.

Compare FTSE 100 trading platforms

Table: sorted by promoted deals first
Updated regularly
Name Product Ratings Finder rating Customer rating Min. initial deposit Price per trade Frequent trader rate Platform fee Offer Link
IG Share Dealing
FREE TRADES
IG Share Dealing
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£250
UK: £8
US: £10
EU: 0.1% (min €10)
UK: £3
US: £0
EU: 0.1% (min €10)
£0
Get 0% commission on US shares when you make 3+ trades in the previous month.

Capital at risk

Platform details
Freetrade
Finder Award
OFFER
Freetrade
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£1
£0
-
£0
Receive a free share worth at least £10 when you deposit £50 within 30 days into your account. Terms & conditions apply.

Capital at risk

Platform details
eToro Free Stocks
FREE TRADES
eToro Free Stocks
Finder score
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User survey
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Expert analysis
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User survey
$50
£0
N/A
£0

Capital at risk

Platform details
Fineco
OFFER
Fineco
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£0
UK: £2.95
US: $3.95
EU: €3.95
N/A
£0
Get £500 in trading commissions to use in the first 3 months (T&Cs apply)

Capital at risk

Platform details
InvestEngine
InvestEngine
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£100
£0
N/A
0% - 0.25%

Capital at risk

Platform details
Bestinvest
OFFER
Bestinvest
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
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User survey
£0
£4.95
N/A
0% - 0.4%

Capital at risk

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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

FTSE 100 performance

You can use the chart below to track the performance of the FTSE 100:

Top FTSE 100 shares by trading volume

How do FTSE 100 ETFs work?

When you buy an FTSE 100 ETF, you are not investing directly in the companies in the index. Most FTSE 100 ETFs will hold shares in the companies in the index, but you won’t yourself by just buying the ETF.

To invest in an ETF, you’ll generally need to pay a fee of around 0.07% to 0.25% each year as well as any trading commissions charged by the broker.

The ETF’s performance will track closely with the performance of the stocks in the index. For example, if the FTSE 100 increases in value by 2%, your ETF should also increase close to 2%; your fund returns may be slightly less than the index price returns after investment charges are deducted.

Types of ETF

Most FTSE 100 ETFs will fully track the performance of the FTSE 100, meaning the fund is weighted more towards the companies with higher market capitalisation. However, there are some ETFs, such as the db X-Trackers FTSE 100 Equal Weight UCITS ETF (XFEW), which invest in the companies in the index equally. This means the performance of smaller companies will have a larger impact on the ETF, relative to their size.

Short ETFs. There are a number of short FTSE 100 ETFs, which effectively bet against the performance of the index. If the FTSE 100 goes down, the value of a short ETF should go up.

Leveraged ETFs. Leveraged ETFs multiply the gains and losses of the index, meaning you’ll get a higher or lower return relative to the size of your investment. You’re effectively borrowing extra capital to potentially increase your returns. For example, if you invest £1,000 in a FTSE 100 ETF with 10x leverage and it goes up 5%, you’d make £500 instead of £50. However, the same would apply to losses.

FTSE 100 ETFs

FundCurrencyTickerFee (TER p.a.)
HSBC FTSE 100 UCITS ETF GBPGBPHUKX0.07%
iShares Core FTSE 100 UCITS ETF (Dist)GBPISF0.07%
iShares Core FTSE 100 UCITS ETF GBP (Acc)GBPCUKX0.07%
Invesco FTSE 100 UCITS ETFGBPS1000.09%
Xtrackers FTSE 100 UCITS ETF 1CGBPXDUK0.09%
Xtrackers FTSE 100 UCITS ETF Income 1DGBPXUKX0.09%
Vanguard FTSE 100 UCITS ETF (GBP) AccumulatingGBPVUKG0.09%
Vanguard FTSE 100 UCITS ETF DistributingGBPVUKE0.09%
Lyxor FTSE 100 UCITS ETF C-GBPGBPL1000.14%
Lyxor FTSE 100 UCITS ETF D-GBPGBP100D0.14%
UBS ETF (LU) FTSE 100 UCITS ETF (GBP) A-disGBPUB030.20%
Amundi ETF FTSE 100 UCITS ETF GBPGBPFT1K0.25%

What’s the best FTSE 100 index fund?

Here are some of the best-performing FTSE 100 funds according to JustETF:

IconFund5-year performanceLink to invest
Vanguard iconVanguard FTSE 100 (VUKE)16.32%Invest with FreetradeCapital at risk
iShares iconiShares Core FTSE 100 (CUKX)16.27%Invest with eToroCapital at risk
Invesco iconInvesco FTSE 100 (S100)14.75%Invest with IGCapital at risk
HSBC iconHSBC FTSE 100 (HUKX)16.09%Invest with IGCapital at risk
Lyxor iconLyxor FTSE 100 (100D)15.09%Invest with IGCapital at risk
Xtrackers iconXtrackers FTSE 100 (XDUK)15.34%Invest with IGCapital at risk

List of companies in the FTSE 100

The drop-down below shows a complete list of companies in the FTSE 100 as of 14 September 2022, listed alphabetically. Companies in the FTSE 100 are switched up to 4 times a year, to ensure it consists of the biggest 100 UK firms.

What’s the 1-, 3- and 5-year return on the FTSE 100?

To give you an idea of the likely returns of investing in the FTSE 100, below we’ve shown the 1-, 3- and 5-year price returns of the index, starting from 2016. Price returns are directly linked to the index value and don’t include any dividends you might receive if you invested directly in stocks in FTSE 100 companies. These returns illustrate the importance of investing for the long term, as the value of the index has experienced short-term fluctuations over this period.

YearIndex value*1-year return3-year return5-year return
20217384.5414.3%9.8%3.4%
20206460.52-14.3%-16.0%3.5%
20197542.4412.1%5.6%14.9%
20186728.13-12.5%7.8%-0.3%
20177687.777.6%17.1%30.3%
20167142.8314.4%5.8%28.2%

*At the end of the year

Pros and cons of investing in the FTSE 100

Pros

  • Get exposure to the largest stocks on the London Stock Exchange
  • A lot of stocks on the FTSE 100 pay dividends
  • Invest easily with an index fund or ETF

Cons

  • You can’t beat the market if you’re investing in the index that the market is based on
  • No diversification — you’re only invested in UK stocks
  • No choice. Choosing the top stocks on a stock exchange could take the excitement out of choosing stocks.

Bottom line

The FTSE 100 contains some of the best-known British brands, such as Lloyds, Rightmove and Rolls-Royce. You can invest in all 100 stocks individually if you have the time, but it could be more expensive this way. There are index funds and ETFs that track the indices, which could be a more cost-effective way to get exposure to these stocks. Make sure you consider the fees involved and that your broker lets you invest in stocks on the London Stock Exchange.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

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