Why do we have so many FTSE indexes and what is the difference between?

[ipoppy]

Hi,
I was trying to find answer on net but it was a bit confusing. Hopefully someone clarify in short therms why do we have so many FTSE indexes and what is the difference between them? Any more risk involved when buying shares etc?

FTSE 100 Index
FTSE 250 Index
FTSE All-Share Index
FTSE 100 Dividend Index
FTSE UK Capped Index Series
FTSE UK Dividend+ Index
FTSE 350 Supersectors Index
FTSE UK Style Index
FTSE Expiry Index
FTSE SmallCap Index
FTSE Fledgling Index
FTSE All-Small Index
FTSE Short Indices
FTSE Leveraged Indices

Thanks in advance.

 

[zambuck]

http://www.ftse.com/Indices/UK_Indices/index.jsp

Click on the Index for further explanation....

 

[Jaydee]

There are many different indices because there are many different types of stocks. We need various benchmarks to reference how well as stock is performing relative to it's peer group.

It would be a waste of time to compare the performance of a largely unknown AIM stock to the FTSE 100 stocks - they have different market caps, different numbers and types of shares in issue, different rules, different reporting standards to follow, different liquidities, different investors, etc - so we compare it to a more useful benchmark.

 

[tomorton]

Indices and large cap stocks are more reliably TA-ed than small caps. All equities are liable to drastic price moves on company / sector news - less likely to move an index much: this reduces risk of loss but also cuts down opportunity for big gains. Trading indices can often be done with narrower spreads and less margin requirement.

 

[ipoppy]

Re: Why do we have so many FTSE indices and what is the difference between?

Indices and large cap stocks are more reliably TA-ed than small caps. All equities are liable to drastic price moves on company / sector news - less likely to move an index much: this reduces risk of loss but also cuts down opportunity for big gains. Trading indices can often be done with narrower spreads and less margin requirement.

Thanks all for answer.
So would I be right by saying that some of the indices listed are more risky or just they got different criteria when comes to buying some stocks? Also why one company is listed on few different indices i.e. BP Plc (FTSE All-Share,FTSE Eurotop 300,FTSE 350 High Yield,FTSE 100,FTSE 350 (ex IT),FTSE All-Share (ex IT),FTSE 350).
Generally speaking what index would be the less likely to drastic moves etc.

Sorry few newbie questions like that but I got to get that picture right.

 

[tomorton]

Yes, some of the indices are more risky (I should have said volatile, because what's important is drastic and dramatic sudden price movements, and these can be a good thing if you have the direction right) because the shares that make them up are also more volatile - AIM has already been mentioned. AIM is full of small cap technology stocks, many of which are small new companies, as opposed to the FTSE100, made up of century-old giants like BP, Sainsbury and M&S.

Pick the indices that have chart behaviour that fits with your trading style and risk tolerance attitudes if you're trading them directly. Either way, start small until you build a consistent track record.

 

[tomorton]

Some shares belong to more than one index to help investors and fund managaers build a portfoilio that gives them exposure to their preferred markets - e.g. tech stocks = AIM, European markets = Eurotop, UK large caps = FTSE100 etc.