The FTSE 100 Index is a benchmark for the largest companies listed on the London Stock Exchange by market capitalization. Known as the “Footsie,” it represents the top 100 firms and serves as a barometer for the performance of the UK economy and global markets due to its international exposure. For investors seeking stable returns from well-established corporations, understanding how to trade within this index is essential.
This article provides an overview of the FTSE 100 and outlines what to consider when selecting brokers to facilitate your investments. To avoid conflicts of interest, brokers trading directly on the FTSE 100 website are not included.
What Is the FTSE 100 Index?
The FTSE 100 comprises some of the most prominent multinational corporations headquartered in the UK, spanning diverse sectors such as finance, energy, consumer goods, and technology. Unlike the FTSE 250, which focuses more on domestic businesses, the FTSE 100 is heavily influenced by global revenue streams. This international exposure provides investors with opportunities to benefit from global economic trends.
Investors can access the FTSE 100 through several channels, including:
- Direct Share Purchases: Buying shares in individual companies within the index.
- Exchange-Traded Funds (ETFs): Funds that mirror the performance of the FTSE 100.
- Contracts for Difference (CFDs): Instruments for speculating on price movements without owning the underlying shares.
Key Considerations for Choosing a Broker
Investing in the FTSE 100 requires a trusted broker that offers robust tools and reliable security. When selecting a broker, evaluate the following criteria:
- Regulatory Oversight
Ensure the broker is regulated by a reputable authority like the UK’s Financial Conduct Authority (FCA). This ensures adherence to transparency, fund safety, and industry standards. - Trading Platforms
Look for intuitive platforms with advanced charting tools, real-time market data, and seamless order execution. Educational resources and research tools are valuable for enhancing investment decisions. - Fees and Costs
Evaluate transaction fees, spreads, and account maintenance charges. Transparent pricing and low costs are vital for maximizing returns. - Range of Instruments
Confirm that the broker offers access to the FTSE 100 via shares, ETFs, and CFDs, allowing flexibility based on your investment goals. - Customer Support
Efficient and knowledgeable customer service is critical, especially for new investors or during market volatility.
Top Brokers for FTSE 100 Trading
Here’s a look at some well-regarded brokers for accessing the FTSE 100 (excluding brokers that trade directly on the index’s website):
- Hargreaves Lansdown: Known for its comprehensive platform and excellent customer service, Hargreaves Lansdown offers access to FTSE 100 shares and ETFs. It is FCA-regulated, ensuring a secure trading environment.
- Interactive Investor: A reliable UK broker offering flat-fee pricing and a wide range of FTSE 100 investment options. Suitable for both retail and institutional investors.
- eToro: Renowned for its user-friendly platform and social trading features, eToro provides access to FTSE 100 shares and CFDs. Its FCA regulation ensures trust and security.
- AJ Bell Youinvest: AJ Bell offers cost-effective access to FTSE 100 investments, including shares and ETFs. Its straightforward platform is ideal for long-term investors.
Advantages of Investing in the FTSE 100
- Stability and Resilience: The FTSE 100 is composed of well-established corporations with a proven track record of weathering economic fluctuations.
- Dividend Potential: Many FTSE 100 companies offer attractive dividend yields, appealing to income-focused investors.
- Global Exposure: The index provides access to companies with significant international revenues, diversifying risk beyond the UK economy.
