Guides / How to invest in the FTSE 100 index: the routes explained and what to check
How to invest in the FTSE 100 index: the routes explained and what to check
You cannot buy the FTSE 100 index itself, because it is a calculated number. People get exposure by buying shares in the companies it measures or a fund or ETF that aims to follow it. This guide explains how each route works and what to read first. It is general information, not advice.
Can you invest in the FTSE 100 index directly?
Short answer: no, and every route that gets you close changes the result a little. FTSE Russell calculates the FTSE 100 under published ground rules. It is a number built from the largest 100 qualifying UK companies listed on the London Stock Exchange. Nobody issues units of the index. What you can hold is the shares it measures, or a fund built to follow it.
Our guide to what the FTSE 100 index is covers how the measure works. This page is about the routes and what each one costs you in accuracy.
Route 1: buying shares in individual FTSE 100 companies
When you buy a share you own part of that one company. It is the most direct way to own what the index measures. It is also a selection: your result depends on which companies you pick and how much you put in each.
Two things make a handful of shares behave differently from the index:
- Weighting. The FTSE 100 is weighted by market capitalisation, adjusted for free float. The ground rules require a free float of at least 10% and adjust each constituent for it. Bigger companies move the index more, so putting equal amounts into a few companies gives you a different mix.
- Membership. Your holdings stay the same until you change them. The index changes at every quarterly review (see below).
Membership changes, so check a live source before relying on any list. FTSE Russell publishes the index, and MarketFrame's company and sector list covers every FTSE 100 company it tracks.
Route 2: funds and ETFs that aim to follow the index
The London Stock Exchange describes an exchange-traded fund (ETF) as an investment fund usually designed to track a particular index, typically a stock market index such as the FTSE 100. It also says ETFs trade on stock exchanges just like shares. Index funds that are not exchange-traded do the same job, but you buy and sell units of the fund instead of trading on the exchange.
The appeal is simple: one holding stands in for the whole basket. The catch is in the words "aims to follow". A fund is a product with its own costs, structure and trading, and it will not match the index exactly.
How a tracker follows an index: full replication, sampling and swaps
Trackers get to the index result in different ways, and the fund's documents say which one it uses.
- Full replication: the fund holds every constituent at roughly the index weights.
- Sampling: the fund holds a selection of shares it expects to behave like the whole index.
- Swaps: the fund gets the index return through a contract with another party (a counterparty). It may hold a different basket of assets, and it depends on that counterparty paying what it owes.
So does a FTSE 100 tracker hold all 100 companies? Only if it fully replicates. Check the document before you assume.
What to read in a tracker's documents: charges, tracking difference, structure and risk warnings
UK funds have given investors a short pre-sale document: a UCITS Key Investor Information Document (KIID) or a PRIIPs Key Information Document (KID). The FCA is replacing both with a single product summary. The transition period started on 6 April 2026, when firms could start choosing between the new summary and their existing documents. The new rules take full effect on 8 June 2027. Until then you may come across any of the three names. The FCA says the product summary is meant to let consumers compare costs, risk, return and past performance calculated to common standards.
Here is a worked way to read one, with no fund named and no numbers assumed:
- Confirm the index. Check that it says FTSE 100 and which version. FTSE Russell also publishes a FTSE 100 Total Return Index, which adds in dividends reinvested on the ex-dividend date. A fund measured against the price index and one measured against the total return index are not being compared on the same basis.
- Find the costs. Look for the ongoing cost figure. It is taken out of the fund, so it lowers your return whether or not you see a bill.
- Check the method. Full replication, sampling or swaps, as described above.
- Look for tracking difference. This is the gap between the fund's return and the index's return over a period. Costs are one cause, and the trading needed at each index review is another. The gap can be positive or negative. Fund reports and factsheets usually show the fund's return next to the index's.
- Read the risk section. The FCA reminds investors that the value of investments can fall as well as rise, and that you can lose some or all of your money.
This takes a few minutes, and two funds that both have "FTSE 100" in their names can turn out to be quite different once you read the documents.
Where tax wrappers fit in (a pointer, not a recommendation)
The London Stock Exchange says ETFs can be bought through a share dealing account, an ISA or a SIPP. According to gov.uk, the most you can save in ISAs in the 2026 to 2027 tax year is £20,000 in total, and a stocks and shares ISA is one of four types. Our stocks and shares ISA guide explains the basics.
For dividend tax and capital gains tax outside a wrapper, use gov.uk and HMRC directly. Rates and allowances change, so this page gives no figures for them. None of this is a recommendation to use any particular wrapper.
What the index does not do for you: breadth, concentration and quarterly changes
- It covers large companies only. FTSE Russell says the FTSE 250, the next tier down, makes up about 15% of UK market capitalisation, and the FTSE All-Share covers 98 to 99%. A FTSE 100 tracker leaves the rest of the market out. Our guide to the FTSE 250 covers that tier.
- It is concentrated. Market capitalisation weighting means the largest companies carry the most influence, and a tracker passes that on to you.
- It changes every quarter. FTSE Russell reviews the index in March, June, September and December. The review uses data from the close on the Tuesday before the first Friday of the review month. A company joins if it has risen to 90th or above and leaves if it has fallen to 111th or below. That buffer keeps the index stable, but it also means the 100 members are not always exactly the 100 largest companies. Each change forces trackers to trade.
Common misreadings of "investing in the index"
- "I can buy the index." You can only buy shares or a fund.
- "A tracker equals the index." It aims to follow the index, and tracking difference measures how far it falls short.
- "The chart shows what I would have made." The usual FTSE 100 chart shows the price index, which leaves out dividends and costs. See how to read a long-term FTSE 100 chart.
- "The FTSE 100 is the UK market." It covers the largest companies only.
How company and sector news can sit alongside this (and why tone is not a forecast)
Whichever route you look at, the companies underneath it are in the news every day. MarketFrame reads that coverage each morning and publishes it free. The daily FTSE news hub shows the latest day, and the company and sector pages show the history going back to 30 September 2026.
Each company and sector gets a tone score from -10 (clearly bad news for it) to +10 (clearly good). The score describes how the coverage reads. It is not share-price data, and news tone is not a share-price forecast. A positive day does not mean a price will rise, and a negative day does not mean it will fall. The score is best used to see what is being reported, and then to click through to the original stories and the company's own announcements.
Questions
Can you buy the FTSE 100 index itself?
No. FTSE Russell calculates the index under its published ground rules, and nobody issues units of it. People get exposure by buying shares in the companies it measures or a fund or ETF that aims to follow it.
What is the difference between buying FTSE 100 shares and a FTSE 100 tracker?
With shares you own part of the specific companies you picked, so your result depends on what you chose and how much you put in each. A tracker is one fund that aims to follow the whole index, and it has its own costs and method.
What does tracking difference mean on a FTSE 100 fund?
It is the gap between the fund's return and the index's return over the same period. Running costs, the method the fund uses and the trading it does at index changes all add to it. The gap can go either way.
Does a FTSE 100 tracker hold all 100 companies?
Not always. A fully replicating fund aims to hold every constituent. A sampling fund holds a selection. A swap-based fund gets the index return through a contract and may hold a different basket of assets. The fund's documents say which method it uses.
Where can I find the official FTSE 100 rules and members?
FTSE Russell publishes the FTSE UK Index Series ground rules and the index pages on lseg.com. The membership changes at quarterly reviews, so check a live source rather than relying on a copied list.
Questions people ask
Can you buy the FTSE 100 index itself?
No. FTSE Russell calculates the index under its published ground rules, and nobody issues units of it. People get exposure by buying shares in the companies it measures or a fund or ETF that aims to follow it.
What is the difference between buying FTSE 100 shares and a FTSE 100 tracker?
With shares you own part of the specific companies you picked, so your result depends on what you chose and how much you put in each. A tracker is one fund that aims to follow the whole index, and it has its own costs and method.
What does tracking difference mean on a FTSE 100 fund?
It is the gap between the fund's return and the index's return over the same period. Running costs, the method the fund uses and the trading it does at index changes all add to it. The gap can go either way.
Does a FTSE 100 tracker hold all 100 companies?
Not always. A fully replicating fund aims to hold every constituent. A sampling fund holds a selection. A swap-based fund gets the index return through a contract and may hold a different basket of assets. The fund's documents say which method it uses.
Where can I find the official FTSE 100 rules and members?
FTSE Russell publishes the FTSE UK Index Series ground rules and the index pages on lseg.com. The membership changes at quarterly reviews, so check a live source rather than relying on a copied list.