FTSE 100 vs Dow Jones: Key differences and performance data (2024)

FAQs

FTSE 100 vs Dow Jones: Key differences and performance data? ›

The FTSE 100 and Dow Jones are both stock market indices that are designed to track the performance of markets. In the case of the FTSE 100, it comprises the largest stocks on the London Stock Exchange, while the Dow Jones is made up of 30 large cap stocks in the US.

It reflects the ups and downs of each company's share price. In the UK, the FTSE 100 is the most well-known index. It measures the performance of the 100 largest companies traded on the LSE.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" /ˈfʊtsi/, is a share index of the 100 companies listed on the London Stock Exchange with (in principle) the highest market capitalisation.

The US equivalent is the Dow Jones, which is even narrower than the FTSE 100 as a measure of wealth. It simply tells us how the biggest 30 companies in the world's richest economy are faring.

Furthermore, in Table 3, we report that the average correlation coefficient between the S&P 500 and FTSE 100 is 0.544 in USD/USD, 0.545 in GBP/GBP, and 0.586 in local currencies.

Investors often use the S&P 500 index as an equity performance benchmark since the S&P contains 500 of the largest U.S. publicly traded companies.

The Standard & Poor's 500 Index (S&P 500) is the most commonly used benchmark for determining the state of the overall economy.

The FTSE 100 is a collection of the largest 100 stocks on the London Stock Exchange when you order the companies by market capitalisation, which is the value of all the company's shares added together. The Dow Jones is slightly different – it's a price weighted index of 30 companies listed on US exchanges.

What is the FTSE 100? The UK's best-known index is the Financial Times Stock Exchange (FTSE) 100, which comprises the hundred largest companies listed on the main market of the London Stock Exchange by market cap. The index is also referred to as the 'Footsie'.

From 1984 to 2022, the price return was 645.2%, yet the total return of the index was over double at 1514.92%. On an annualised basis, this equates to a price return of 5.4%, and a total return of 7.48%.

What is the most comprehensive stock index? ›

The S&P 500 and Dow Jones Industrial Average are the top large-cap indexes. Notable mid-cap indexes include the S&P Mid-Cap 400, the Russell Midcap, and the Wilshire US Mid-Cap Index.

The equivalent of the S&P 500 in the UK is the FTSE 100, which tracks the performance of the 100 largest companies on the London Stock Exchange. Like the S&P 500, the FTSE 100 is also used as a general yardstick to measure the relative health and performance of the UK stock market and wider economy.

The S&P500 tracks top companies in the US stock market, and the FTSE 100 tracks top companies in the UK. Investors looking for growth may choose to model their investments after the S&P500, while those looking to offset risk with consumer cyclical stocks may choose to model their portfolios after the FTSE 100.

One of the most popular indexes in the world is the S&P 500. This collection of companies has generally outperformed the UK stock market for decades now. However, the FTSE 100 is cheaper and pays a much higher dividend than the S&P 500.

Firstly, the S&P 500 is significantly less concentrated than the FTSE 100. As the name implies, the S&P 500 tracks a great deal more companies than the FTSE 100. Thus it is a more diversified stock universe. Additionally, the largest market cap companies have a greater impact on the FTSE 100, than the former.

Nasdaq 100 has significantly outperformed S&P 500 in terms of performance. Over the past 15 years, Nasdaq 100 has delivered a CAGR of around 16%, while S&P 500 has returned about 8%.

Many investors consider one of the major indexes, such as the Dow Jones Industrial Average (DJIA) or Nasdaq 100 as broad market indexes. Better representations might be the Wilshire 5000 or Russell 3000, however. Th Nasdaq 100 has handily outperformed the other major market indexes over the last decade.

The most common measures of performance are the market indexes, with the Dow Jones Industrial Average and the S&P 500 being the most popular.

Which index is the broadest indicator benchmark of how US stocks are performing? ›

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities.

The best performing Country in the last 5 years is Denmark, that granded a +12.51% annualized return. The worst is Pakistan, with a -17.83% annualized return in the last 5 years. The main Country Stock Indexes can be easily replicated by ETFs.

One of the reasons for such a poor performance, in addition to the financial crisis, is likely to be that low interest rates have squeezed banks' profit margins. Another potential reason for the underperformance of the FTSE 100 is that there are very few IT companies.

In addition to representing 30 of the most highly capitalized and influential companies in the U.S. economy, the Dow is also the financial media's most referenced U.S. market index and remains a good indicator of general market trends.

The Advantages of Investing in the FTSE 100

One of the main advantages of investing in the FTSE 100 is diversification. By investing in a stock market index, individuals can spread their risk across a variety of companies and sectors, rather than placing all their capital in one particular venture.

The FTSE 100's relatively high dividend yield is attractive to income-seekers and the index has 'delivered better total returns to investors over the years than the headline market level might suggest', says Tom Stevenson, investment director at Fidelity. It is also boosted by some of the major players in the index.

The FTSE 100 Index is a market-capitalization weighted index comprising the 100 most highly capitalized blue-chip companies listed on the London Stock Exchange's main market.

The United Kingdom Stock Market Index (GB100) is expected to trade at 7374.87 points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 6924.49 in 12 months time.

What is the most valuable company in the FTSE 100? ›

The three most popular stock indexes for tracking the performance of the U.S. market are the Dow Jones Industrial Average (DJIA), S&P 500 Index, and Nasdaq Composite Index.

Bloomberg Ticker : SPC500CP

The S&P China 500 comprises 500 of the largest, most liquid Chinese companies while approximating the sector composition of the broader Chinese equity market.

Due to its broad market exposure, the STOXX Europe 600 index is often quoted as the European equivalent of the U.S. focused S&P 500 index. ETF investors can benefit from price gains and dividends of the STOXX Europe 600 constituents. Currently, the STOXX Europe 600 index is tracked by 8 ETFs. 0.07% p.a. - 0.20% p.a.

1) IWDA (MSCI World index)

The MSCI World index tracks over 1,500 large-cap companies from 23 "developed" countries. This includes the US, but also Japan, Germany, Australia, etc… Compared to the S&P 500, the MSCI World is more diversified geographically and exposes you to other countries besides the US.

While both the DJIA and S&P 500 are used by investors to determine the general trend of the U.S. stock market, the S&P 500 is more encompassing, as it is based on a larger sample of total U.S. stocks.

Whereas, DJIA takes into consideration only 30 companies. A measure with a large sample will provide a better view therefore S&P 500 proves to be a better index. 2. DJIA is more popular as compared to S&P 500 index because it shortlists the companies and provides data about blue-chip companies having stable earnings.

Over rolling monthly 10-year periods through 2022, the fund has frequently outpaced the S&P 500 and its peer average.

Does Warren Buffett outperform the S&P 500? ›

Berkshire has a history of outperforming the S&P 500 during recessions, and performing especially well during bear markets, according to data from Bespoke Investment Group. Since 1980, Berkshire shares have beat the broader market over the course of six recessions by a median of 4.41 percentage points.

The "FTSE" is the Financial Times Stock Exchange in the U.K. that is a provider of different indices, its most popular being the FTSE 100, which tracks the top 100 companies by market cap in the U.K. The U.S. version of this would be the S&P 500, which tracks the top 500 U.S. companies by market cap, or the Dow Jones ...

Furthermore, in Table 3, we report that the average correlation coefficient between the S&P 500 and FTSE 100 is 0.544 in USD/USD, 0.545 in GBP/GBP, and 0.586 in local currencies.

It's the global economy

The FTSE 100 tracks the 100 largest companies listed in London, and its largest members are multinationals whose sales and profits come from around the world. Companies in the FTSE 100 derive approximately 75% of their revenues from overseas.

The latest SPIVA report is typical: Just 17% of US large-cap stock pickers beat the S&P 500 over the past 10 years through 2021, and that number drops to 6% over 20 years. Time makes a fool of most stock pickers.

The S&P 500 could approach or exceed the 10,000 level by the early to mid-2030s. Many investors take it as a given that—since returns on the S&P 500 have been strong for 10-plus years—stocks are expensive and over-owned.

Is Investing in the S&P 500 Less Risky Than Buying a Single Stock? Generally, yes. The S&P 500 is considered well-diversified by sector, which means it includes stocks in all major areas, including technology and consumer discretionary—meaning declines in some sectors may be offset by gains in other sectors.

As you can see, high inflation tends to drive higher interest rates, which has a negative impact on S&P 500 stocks. After inflation peaks and begins to normalize, double-digit S&P 500 gains tend to follow.

The Advantages of Investing in the FTSE 100

One of the main advantages of investing in the FTSE 100 is diversification. By investing in a stock market index, individuals can spread their risk across a variety of companies and sectors, rather than placing all their capital in one particular venture.

What is the purpose of using an index as a benchmark? ›

The purpose of a benchmark index is to provide a standard measure for evaluating the performance of investment portfolios. By comparing the returns of an investment portfolio to the returns of a benchmark index, investors can determine whether their investments are outperforming or underperforming the market.

FTSE Russell is a global provider of benchmarks and indices with industry-leading capabilities across asset classes, styles, and strategies.

One of the most popular indexes in the world is the S&P 500. This collection of companies has generally outperformed the UK stock market for decades now. However, the FTSE 100 is cheaper and pays a much higher dividend than the S&P 500.

The FTSE 100 is calculated by weighing all stocks listed on the London Stock Exchange by market capitalisation. The 100 companies with the highest market caps make it into index. Stocks with higher market caps have more weight in the FTSE 100 and therefore have a bigger effect on the index's price movements.

From 1984 to 2022, the price return was 645.2%, yet the total return of the index was over double at 1514.92%. On an annualised basis, this equates to a price return of 5.4%, and a total return of 7.48%. How has FTSE 100 performed over the past 10 years (2012 – 2022*)?

There are four main types of benchmarking: internal, external, performance, and practice.

And while all passive ETFs track an investment index, not all the indices they track can or should be considered “benchmarks.” Benchmarks are static groupings of names, assembled with little portfolio consideration; non-benchmark indices are deliberately designed to provide investors with access to specific exposures, ...

What is the FTSE a measure of? ›

The FTSE 100 is a market-capitalisation weighted index of UK-listed blue chip companies. The index is part of the FTSE UK Series and is designed to measure the performance of the 100 largest companies traded on the London Stock Exchange that pass screening for size and liquidity.

FTSE understands that investors need an objective and consistent approach to the classification of markets as Developed, Advanced Emerging, Secondary Emerging or Frontier within global benchmarks.