How to invest in FTSE 250

If you’re building an investment portfolio focused on future growth then it’s worth considering whether to invest in the FTSE 250. It’s an index of UK medium-sized companies and its growth has massively outstripped the FTSE 100 over the last 20 years.

In this guide, we explain everything you need to know about the FTSE 250. We answer common questions like “why invest in FTSE 250 stocks?” and “what are the pros and cons of investing in the FTSE 250?”.

What is the FTSE 250?

The FTSE 250 is a share index for medium-sized UK companies. It’s calculated by working out the market value of all the companies listed on the London Stock Exchange.

The first to the 100th largest UK companies are included in the FTSE 100 and the 101st to the 350th largest UK companies are included in the FTSE 250.

How to invest in the FTSE 250

You have several choices if you want to invest in the FTSE 250. Here are some of your options:

• Open a pension fund and invest in an FTSE 250 fund within your pension. You won’t be able to access your money until you’re 55 at the earliest, but you will get your investments topped up by government tax relief.
• Use a stocks and shares ISA. You won’t need to pay tax on any capital growth on shares or funds held within your ISA.
• Invest using a trading platform trading account. You may need to pay tax on any capital growth, but you will get a tax-free allowance of £12,300 per year.

Once you’ve picked the type of platform (pension, ISA or trading platform) to invest in the FTSE 250, you will need to choose whether to invest in an FTSE 250 fund or invest in individual shares. Funds can be a simpler option for new investors as your investment will be spread across several companies and you won’t need to pick which individual shares to buy.

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Why invest in FTSE 250 stocks?

If you’re building a balanced investment portfolio, you should consider including FTSE 250 stocks. That’s because the FTSE 250 contains smaller companies than the FTSE 100 and smaller companies often have the potential to grow more in the future.

The FTSE 100 is dominated by commodities, financial service companies and well-known consumer names. Many of these companies focus on paying dividends to investors rather than reinvesting profits in the business. It can mean they are focused on maintaining their market value rather than future growth.

How do FTSE 250 stocks perform?

The FTSE 250 has grown an average of 11.3% each year over the past decade, but this fluctuates from year to year. For example, the index grew 25.03% in 2019 but dropped by 6.16% in 2020 due to the COVID-19 crisis.

Which companies are listed on the FTSE 250?

The FTSE 250 includes some well-known household names such as Aston Martin, Marks and Spencer, Dr. Martens and Virgin Money. The FTSE 250 companies are reviewed regularly and may change over time. That’s because companies in the FTSE 250 might increase in market value and move into the FTSE 100 or reduce in value and drop out of the FTSE 250.

Searchable list of FTSE 250 companies

Choosing which FTSE 250 shares you want to buy

Because it’s difficult to pick shares with the best growth potential, many investors choose index tracker funds that invest in all the shares in an index. However, if you do want to pick a few individual stocks, then here are some investment tips:

• Invest in a growth sector – some of the fastest growing stocks in the world are currently technology stocks like Meta and Apple.
• Look at the financial accounts of companies and work out their p/e (price/earnings) ratio. It’s a measure experts use to show if the company is potentially good value for money. It’s calculated by dividing the price of the shares by the earnings per share (profit divided by the number of shares issued). You can compare several companies and pick one with the best p/e ratio.
• Follow the business news. Even if a company has a great p/e ratio and operates in a growth sector, there may be another reason a company has a low share price such as bad news about the company.
• Diversify your portfolio. Try to spread your investments between many companies, even if you invest in individual shares.
• Don’t invest money you can’t afford to lose. You don’t want to have to sell your shares really cheaply if there’s a stock market crash.

Best performing FTSE 250 funds

Even though ETFs are considered lower risk investments, you need to remember that all investments rise and fall over time. Before you invest, it’s important to look at historical performance.

Here are some of the best performing FTSE 250 funds according to justETF:

Fund	Icon	1-year performance (to Apr. '25)	5-year performance (to Apr. '25)	Link
Invesco FTSE 250 ETF (S250)		-3.09%	31.53%	Invest Capital at risk
HSBC FTSE 250 ETF (HMCX)		-6.53%	13.22%	Invest Capital at risk
iShares FTSE 250 ETF (MIDD)		-6.46%	13.33%	Invest Capital at risk
Vanguard FTSE 250 (VMID)		-6.76%	13.41%	Invest Capital at risk
Xtrackers FTSE 250 ETF 1D (XMCX)		-6.30%	8.35%	Invest Capital at risk

Can I trade in FTSE 250 stocks in the UK?

If you are a confident investor and don’t mind taking on some risk, it is possible to trade in individual stocks within the FTSE 250. However, most investors treat the FTSE 250 as a long-term investment rather than doing share trading.

How much does it cost to invest in FTSE 250 stocks?

The cost of investing in FTSE 250 stocks depends on your investment provider and type of investment. Common types of fees include the following:

• Annual or monthly fees. These are charged by most pension companies, ISA providers and trading platforms. They can be a percentage of your total pension fund or a flat monthly fee and range from 0.35% per year to 1% per year.
• Fund fees. Pension companies and ISA providers also charge fees for individual funds based on the total amount invested in that fund. Index funds tend to be low cost and start at around 0.15% of the fund value per year.
• Trading fees. Most trading platforms charge a cost per trade of between £3 and £8.

What to keep in mind when trading FTSE 250 stocks

If you choose to invest in a FTSE 250 index fund, you will have the choice of whether to reinvest or withdraw your dividend income as cash. This choice can make a big difference over time to your investment growth. That’s because the FTSE 250 returned an average of 13% from 2010 to 2019 growth per year for investors who reinvested their dividends, but only 10% per year over the same period for investors who withdrew their dividend income.

Pros and cons

Here are some pros and cons of investing in the FTSE 250 compared with the FTSE 100:

Compare FTSE 100 and FTSE 250 in more detail

Bottom line

Building a well-diversified investment portfolio, that’s invested in larger, medium and smaller companies, is the holy grail for investors. That’s why many investors choose to invest in the FTSE 250, the UK’s share index for medium-sized companies. The FTSE 250 has historically grown at a faster rate than the FTSE 100, averaging growth of 11.3% per year over the past decade compared to 6.7% for the FTSE 100.

Some platforms that let you buy FTSE 250 stocks

Most UK trading platforms and investment providers will let you buy FTSE 250 stocks. Take a look at some of your options for an investment provider.

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Frequently asked questions

• Should I invest in FTSE 250?

  Investing in the FTSE 250 can be a good idea if you want to diversify your investments rather than just investing in the biggest companies.

  Ultimately, whether you should invest in the FTSE 250 depends on your circumstances and your attitude to risk. Like other stocks, it’s generally better as a longer-term investment where you can afford to wait to withdraw your money. For example, if you invested short-term savings in the FTSE 250 and the stock market crashed, you might need to sell your investment before it has time to bounce back in value.

• How can I day trade the FTSE 250?

  You can’t day trade in the FTSE 250 as a whole but you can buy and sell shares in companies within the FTSE 250 by using a trading platform.

• How much money should I invest in the FTSE 250?

  How much you should invest in the FTSE 250 depends on your circumstances and the reason for your investment. If you are investing for a long-term retirement income then many experts recommend investing 10-25% of your income across a range of investment types.

• Can you invest directly in the FTSE 250?

  You can invest in the FTSE 250 through an index-tracking fund or by buying individual shares.

• Does FTSE 250 include FTSE 100 companies?

  The FTSE 250 doesn’t include FTSE 100 companies. It contains 250 companies from the 101st largest to the 350th largest UK company.

• Is FTSE 250 small cap?

  The FTSE 250 contains medium-sized or mid-cap companies. The FTSE SmallCap and FTSE AIM All-Share indices contain smaller companies.

• What are the other indices on the London Stock Exchange?

  The London Stock Exchange includes the FTSE 100, FTSE 350, FTSE SmallCap and FTSE All-Share indices. The FTSE also includes indices for medium and small-sized companies including the FTSE AIM UK 50, FTSE AIM 100 and FTSE AIM All-Share.

Written by

Zoe Stabler DipFA

Senior writer

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. See full bio

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