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Exploring UK Share Investments:
When discussing investments in UK shares, people often refer to the prominent blue-chip companies listed on the FTSE 100. This index serves as a key indicator of the overall UK stock market performance. For instance, during the early days of the Covid-19 pandemic, the FTSE 100 dropped from 7,500 to 5,000, reflecting the broader market impact.
However, opportunities extend beyond this flagship index. Smaller companies, represented in indices like the FTSE Fledgling, have shown potential for higher returns compared to larger counterparts. For example, the FTSE Fledgling index saw nearly 60% total returns over the last three years, outperforming the FTSE 100.
Markets on the London Stock Exchange (LSE):
The LSE is a historic global stock exchange where companies and governments raise funds by issuing shares and bonds, which can then be traded by investors. The LSE comprises two main markets:
Main Market:
- Over 1,000 companies from around the world, including major names like Shell, AstraZeneca, HSBC, and Unilever, are listed here.
- Companies must meet rigorous regulatory standards to be listed.
- Recent changes by the Financial Conduct Authority (FCA) have made it easier for companies to list on the LSE by reducing the 'free float' requirement from 25% to 10%, though the minimum market capitalisation has increased from £700,000 to £30 million.
- The Main Market includes segments for high-growth companies, specialist funds, and premium companies with higher listing standards.
Alternative Investment Market (AIM):
- Established in 1995, AIM is designed for smaller and medium-sized companies seeking funding.
- Around 800 companies are listed on AIM, including Jet2, BooHoo, Hotel Chocolat, and YouGov.
- AIM's lighter regulatory requirements make it more accessible and less costly than the Main Market. There are no minimum free float or market capitalisation requirements, and companies do not need a three-year trading history.
- AIM is known for attracting high-growth companies in early stages, with average revenue growth of 40% in the first three years post-IPO. Notably, companies like ASOS and Domino's Pizza began on AIM before moving to the Main Market.
