January 3, 2024 marks the 40th birthday of the FTSE 100, and celebrates its stability, endurance and resilience — with a quarter of its original constituents still making up the blue-chip index.
Established in 1984, the FTSE 100 — a share index of the 100 companies listed on the London Stock Exchange — has become synonymous with the trends of the UK stock market. Over four decades, it has weathered economic storms, witnessed technological revolutions, and adapted to the changing landscape of global finance.
The fact that 25% of its inaugural members continues to shape the index attests to the enduring strength and stability that the FTSE represents. What began as a vision to provide a comprehensive snapshot of the UK’s leading companies — allowing investors to gauge market performance accurately — has, over time, evolved into a globally recognized benchmark, influencing investment decisions and reflecting the health of the broader economy.
This 40th anniversary is in part a celebration of the FTSE’s ability to adapt and include emerging sectors and industries, which reflects a commitment to staying relevant and dynamic.
But more significant change will be needed in the coming years.
Many believe that the FTSE will need to adapt faster to keep apace with the changes that climate change will bring, and find a way to draw in new tech industries. Efforts are now underway to attract high-growth firms and diversify the index’s composition.
In honour of the Footsie’s 40th birthday, here are a few things that have changed in the 40 years of the index, and some lesser-known facts…
1. Today, the FTSE contains 26 of its founder members, but only 14 of these still have the same name. The majority of the name changes have come about due to mergers, acquisitions, or restructures. A few examples include British Aerospace, which became BAE Systems; Commercial Union, which became Aviva; Royal Bank of Scotland, which became NatWest, and Reed International which became RELX.
2. There’s now much more of an international flavour to the FTSE. Many of the companies are internationally-focused, so the index’s movements are a fairly weak indicator of how the UK economy is faring. They’re now significantly affected by the pound sterling’s exchange rates.
3. Over the span of four decades, the FTSE 100 has shown substantial growth, rising from 1,000 points at its inception to a current value of 7,733. This 660% capital return is equivalent to 5.2% per year, according to data from AJ Bell. More than $33.8 billion of index funds track the Footsie today.
4. 40 brands — including Boots, House of Fraser, Burton and Cable & Wireless — have been acquired and gone private. Eleven other companies including Cadbury Schweppe and General Electric have broken up and de-listed.
5. RELX, the academic journals publisher, has produced the largest share market returns of the past 40 years, according to one study. The company has grown, in most part, organically, with a recent boost to its share price arising due of its potential in harnessing artificial intelligence. Other survivors that have produced massive returns include BAT Industries (formerly British American Tobacco) and Rio Tinto (RTZ).
Our Investing for Change: Our Global Impact programme launched on 12 December — watch our panel discussion held at the London Stock Exchange here, and enjoy interviews with thought-leaders such as Nick O’Donohue, from British International Investment, and Jane Goodland from LSEG.