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Highlights
- The FTSE 100 and FTSE 250 indices combined together cover the largest 350 companies listed on the London Stock Exchange.
- FTSE 100 stocks are large-cap while the FTSE 250 stocks are mostly mid-cap.
- FTSE 100 companies have a solid footprint internationally, while the FTSE 250 counterparts are more strongly associated with the UK economy.
The FTSE 100 index comprises the 100 largest companies trading on the London Stock Exchange (LSE) while the FTSE 250 index comprises the next 250 largest companies trading on the LSE. Together, both these indices cover the largest 350 companies listed in London.
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FTSE 100 vs. FTSE 250
The foremost distinction between the two UK indices is their total market capitalisation. As of 29 April 2022, the total market cap of the FTSE 100 index stands at £1.98 trillion, while the FTSE 250 index’s market cap stands at £376.82 billion. The constituents of the FTSE 100 index are large-cap blue-chip firms, such as Lloyds (LON: LLOY) and Vodafone (LON: VOD).
On the contrary, the constituents of the FTSE 250 index are mostly the mid-cap firms, like Centamin (LON: CEY) and Currys (LON:CURY).
Generally, the volatility of large-cap stocks is comparatively less than mid-one stocks. However, while mid-cap stocks may not hold dominant positions in their respective industries, they have the potential for higher growth. But when the market sentiment is bearish, the investors usually move towards the FTSE 100 stocks as they are more defensive.
For investors looking for diversified stocks, FTSE 250 index is a better option, as it comprises stocks from a range of sectors unlike the FTSE 100 index, which focuses on limited sectors including healthcare, financial services, and energy. Also, the top three companies of the FTSE 100 index account for about 20% of the total market cap of the index, while this figure stands at around 4% for the FTSE 250 index.
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Another difference between the two indices is that around 50% of the total revenue generated by the FTSE 250 constituents comes from overseas, while this figure stands at 70% for the FTSE 100 stocks.
Also, the FTSE 100 companies have a solid footprint internationally, while the FTSE 250 counterparts are more strongly associated with the UK economy.
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The foreign exchange markets also have a lesser impact on the FTSE 250 stocks as they don’t have as much global presence. However, the FTSE 100 stocks are usually affected when the sterling weakens as the cost of exporting declines. Moreover, the FTSE 100 stocks generally pay out higher dividends to shareholders as compared to the FTSE 250 stocks.
Top FTSE 100 and FTSE 250 stocks
Based on market capitalisation, the top three FTSE 100 stocks as of 29 April 2022 are Shell plc (LON: SHEL), AstraZeneca Plc (LON: AZN), and HSBC Holdings Plc (LON: HSBA), with a market cap of £164,212.82 million, £163,653.31 million, and £99,425.82 million, respectively.
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For the FTSE 250 index, the top three companies include Centrica plc (LON: CNA), Unite Group plc (LON: UTG), and Harbour Energy plc (LON: HBR), with a market cap of £4,738.28 million, £4,638.24 million, and £4,638.24 million, respectively.
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