ftse 100

[kije12]

How does the FTSE 100 adjust itself when companies drop out and others are promoted?

Over the long term is it fair to compare a protfolio of shares with the FTSE 100?

Thanks, Tom.

[WoWo]

I think there is a minimum requirement that needs to be used, say 500p a share, a company might drop off it goes bellow this and then the compay taking it's place will have a price around this mark.

[Octavius]

The constituents of the index are determined quarterly; the largest companies in the FTSE 250 Index are promoted if their market capitalisation would place them in the top 90 firms of the FTSE 100 Index. As of 2005, the threshold for inclusion is about 2 billion pounds. The largest 5 constituents of the index are BP, HSBC Holdings, the Vodafone Group, the Royal Bank of Scotland Group and GlaxoSmithKline (but note that the Royal Dutch/Shell group would be in the top 5 if the whole of it was listed on the LSE, rather than just the 40% represented by Shell Transport and Trading).

The index is seen as a barometer of success of the British economy and is the leading share index in Europe. According to the FTSE Group's website the FTSE 100 companies represent about 80% of the UK share market.  So I think it would be reasonable to use it for portfolio comparison.