FTSE 100 Performs Quarterly Reshuffle

FTSE 100 Performs Quarterly Reshuffle

almost 4 years ago2 mins

Mentioned in story

Every quarter the FTSE 100’s shufflin’ – and that’s why the major UK stock market index picked up a few new stocks and lost a few old ones on Wednesday 🕺

What does this mean?

The FTSE 100 comprises the UK’s biggest public companies by value, and its performance helps investors gauge the health of both corporate Britain and the wider economy. But since company fortunes can change with the wind, the FTSE is regularly updated to factor in stocks whose valuations have risen – and boot out any that have shrunk.

Of those that got the chop: DIY chain Kingfisher and travel company TUI, which – despite benefiting from rival Thomas Cook’s bankruptcy last year – struggled with the grounding of Boeing’s 737 MAX 8 airplanes and, more recently, the effects of coronavirus ✈️ They were joined by NMC Health, whose shares were suspended following a major accounting scandal. Mining company Fresnillo and alternative asset manager Intermediate Capital Group, meanwhile, were more than happy to take those companies’ “blue chip” status off their hands.

Daily Brief Image

Why should I care?

The share of investors’ cash in “passive” funds – which track the performance of stock market indexes, often via exchange-traded funds (ETFs) – is getting bigger. In the US, in fact, half of all stock market investment is now passive 💰 Ahead of Wednesday’s rebalancing, then, keen-eyed “active” investors might’ve bought up certain high-performing UK stocks in hopes they’d profit when passive funds mirrored the updated index.

Daily Brief Image

Even if you prefer individual stocks to ETFs, it’s worth keeping an eye on which ones are being added to the various indexes 👀 Studies suggest stocks that are heavily owned by ETFs climb more than average in a rising market – perhaps thanks to the higher demand. And since ETFs are slower to sell, stocks may also drop by less than average in a falling market too.

Daily Brief Image
Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG