How to invest in the FTSE 100

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 index, and how to start investing in the FTSE 100.

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 fund or ETF, you’ll need to open a share trading account.
2. Fund your account. The next step is depositing money into your account to buy shares or invest in a fund, either by bank transfer or using a debit card.
3. Choose your FTSE 100 investments. Either select a FTSE 100 fund or, if you want to buy shares, research the individual companies you’re considering. Once you know what you want, find the FTSE 100 stocks on your platform.
4. Hit buy. It’s as simple as that.

What’s the best FTSE 100 index fund?

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

Note: We’ve added a link next to each of these funds, which takes you to a share trading app where you can sign up to invest in that FTSE 100 fund.

Fund	Icon	1-year performance (to Mar. '25)	5-year performance (to Mar. '25)	Link
Xtrackers FTSE 100 ETF 1C (XDUK)		13.08%	84.31%	Invest Capital at risk
iShares FTSE 100 ETF GBP Acc (CUKX)		12.86%	84.03%	Invest Capital at risk
Invesco FTSE 100 ETF (S100)		12.52%	83.31%	Invest Capital at risk
HSBC FTSE 100 ETF (HUKX)		8.92%	54.29%	Invest Capital at risk
Multi-units Luxembourg - Lyxor FTSE 100 ETF - (100D)		8.15%	52.56%	Invest Capital at risk
iShares Core FTSE 100 ETF GBP (Dist) (ISF)		8.76%	53.89%	Invest Capital at risk
Vanguard FTSE 100 ETF (VUKE)		8.46%	53.23%	Invest Capital at risk

What is the FTSE 100?

The Financial Times Stock Exchange 100 (FTSE 100 for short, sometimes referred to as the “footsie”) 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.

Search the full FTSE 100

Can you invest in the FTSE 100?

Yes, but not directly. Many experts talk about investing in the FTSE 100, but it’s not actually an investment fund, it’s an index. Think of an index as a hypothetical portfolio, designed to monitor the performance of the assets it contains (in this case, large-cap UK stocks). As such, you can’t actually invest directly in the FTSE 100.

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

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 shares 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 each stock (and avoiding trading fees), you could instead invest in a FTSE 100 fund or ETF. These track the performance of all the current stocks in the FTSE 100.

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FTSE 100 performance

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

Top FTSE 100 shares

Here’s a list of the top constituents in the FTSE 100 by market cap (as of September 2024). These top FTSE shares will shift regularly as the market moves. If you were to invest in a FTSE 100 fund or ETF, the bulk of your investment will go to these shares:

1. AstraZeneca (AZN)
2. Shell (SHEL)
3. HSBC (HSBA)
4. Unilever (ULVR)
5. BP (BP)
6. Relx (REL)
7. GSK (GSK)
8. British American Tobacco
9. Diageo (DGE)
10. Rio Tinto (RIO)

How do FTSE 100 ETFs work?

A FTSE 100 ETF is traded on stock exchanges. So unlike funds, the price can fluctuate throughout trading hours. Generally, ETFs are cheaper to run than funds (which is why they have low ongoing fees).

An ETF tracking the FTSE 100 also tends to be cheap because it doesn’t require much oversight. The FTSE 100 index is maintained by FTSE Russell and it’s reviewed each quarter. FTSE 100 ETFs should automatically adjust to reflect any changes.

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 ETFs

Here’s a quick summary of the main types of FTSE 100 ETFs you’ll come across:

• Market cap weighted ETFs. Most FTSE 100 ETFs will be market-cap weighted and track the performance of the index, meaning the fund is weighted more towards the companies with higher market capitalisation. However, there are some ETFs organised differently, such as the X-Trackers FTSE 100 Equal Weight UCITS ETF (XFEW). As the name suggests, it invests in all the companies in the FTSE 100 index equally. This means the performance of smaller firms will have as much of an impact as the larger stocks.
• 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 FTSE 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 magnification would apply to losses.

FTSE 100 ETFs

Below are some of the most popular FTSE 100 exchange-traded funds available. They’re ranked by ongoing costs (this should be as low as possible considering each one mirrors the same investments). Just search the stock ticker on your share dealing account, keep in mind not every platform will have every FTSE 100 ETF.

Expert comment: Why should you invest in the FTSE 100?

George Sweeney

Finder Money Expert

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 these firms crashing are also lower than average. All of this makes the FTSE 100 a decent option if you want to manage your risk. 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 (like US tech stocks).

Pros and cons of investing in the FTSE 100

Bottom line

The FTSE 100 contains some of the best-known British brands, such as Lloyds, Tesco 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 FTSE 100, which could be a more cost-effective way to get exposure to these stocks. Now that you know how to invest in the FTSE 100 index, make sure you consider the fees involved and that your broker lets you invest in the London Stock Exchange.

Frequently asked questions

• What's the best way to invest in the FTSE 100?

  The most straightforward way to invest in FTSE 100 is through an investment fund, such as an ETF or index fund, that tracks the performance of stocks in the index. This option means you won’t own shares directly, but your returns will still reflect the performance of FTSE 100 companies. You can also buy shares in each individual company, but this will be much more laborious and time-consuming than investing in a fund and may incur high share-trading fees.

• Does the FTSE 100 pay dividends?

  The index itself doesn’t pay a dividend but your FTSE 100 fund or ETF will pay dividends because plenty of companies in the index reward investors with income payments. Keep in mind dividends can vary and are not guaranteed.

  When you choose a FTSE 100 fund, you should be able to choose between distribution or accumulation. Distribution means dividends are paid out to you as cash, whereas accumulation means income is rolled back into your investment to compound. If you’re not using a tax-efficient account like a stocks and shares ISA, be aware you may have to pay tax on dividend income that’s paid out to you as cash.

• What's the current dividend yield of the FTSE 100?

  At the time of writing (June 2023), the FTSE 100 dividend yield is 3.79%. Keep in mind this will fluctuate regularly.

• Who owns the FTSE 100?

  The FTSE is owned by the London Stock Exchange Group. The FTSE 100 is one of a number of indexes that the FTSE offers and is probably the best known and most widely used. Other popular indexes include the FTSE 250, the FTSE 350 and the FTSE All-Share.

• Is the FTSE 100 an ETF?

  No. The FTSE 100 is an index. You can invest in an ETF that tracks the FTSE 100.

• Can you short the FTSE 100?

  To do this, you would need to short either individual stocks on the FTSE 100 or short an index fund that tracks the FTSE 100. Find out more about short selling in our guide.

• What's the difference between the FTSE 100 and the FTSE 250?

  The FTSE 100 is the top 100 stocks on the London Stock Exchange, while the FTSE 250 is the top 250. That means that the first 100 stocks of the FTSE 250 are the FTSE 100, plus the next 150 are featured.

• Is it better to invest in the FTSE 100 or the S&P 500?

  Neither index is better or worse – they’re simply different, as we explain in our full guide on the FTSE 100 vs S&P 500. The S&P 500 includes more companies, so is statistically more diverse. However, this means it also includes a number of higher-risk stocks than the FTSE 100. The good news is that you don’t have to choose one or the other to invest in. Instead, why not split your investment across 2 funds – one tracking the FTSE 100 and one tracking the S&P 500?

Written by

Ceri Stanaway

Writer

Ceri Stanaway is a researcher, writer and editor with more than 15 years’ experience, including a long stint at independent publisher Which?. She’s helped people find the best products and services, and avoid the pitfalls, across topics ranging from broadband to insurance. Outside of work, you can often find her sampling the fares in local cafes. See full bio

Co-written by

George Sweeney, DipFA

Deputy editor

George is a deputy editor at Finder. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, Online Mortgage Advisor, Wealth, and Compare Forex Brokers. He's focused on making personal finance and investing engaging for everyone. To do this he draws from previous work and his Level 4 Diploma for Financial Advisers (DipFA), sharing what he’s learnt. When he’s not geeking out about money, you’ll find him playing sports and staying active. See full bio

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