Whether you are considering investing in an FTSE 100 fund or have already invested in a fund, do you know what the maximum holdings you currently hold?
You will see the name of this tracker everywhere, but no one seems to have ever talked about which holdings are the largest investments in the index. Therefore, here is an in-depth understanding of some of the finer details to give you a better understanding of this investment.
What is the FTSE 100 Index Fund?
FTSE 100 Index Fund will adopt Index fund Or exchange-traded funds (ETF). As you may know, these funds only track the top 100 companies in the UK.
But the way the funds are structured means that your funds are not evenly distributed among companies. Therefore, if you invest £100 in the fund, it will not happen that every company gets £1.
Most FTSE 100 index funds are market capitalization weighted.It just means that the bigger a company Market value, The more investment you get. Therefore, the companies at the top of the list will receive more funding than the companies at the bottom.
What are the top ten stocks currently held by the FTSE 100 Index Investment Fund?
The funds in the top ten will change from time to time. However, when you invest in the FTSE 100 Index, it is worth knowing which companies have received most of your capital.
The following information is based on one of the most popular funds in the market, iShares Core FTSE 100 UCITS ETF. The following are the top ten companies and a rough idea of the current distribution:
|3||HSBC Holdings (HSBA)||4.5%|
|5||Royal Dutch Shell (RDSA)||3.69%|
|8||Royal Dutch Shell Class B (RDSB)||3.37%|
|9||British American Tobacco (BATS)||3%|
|10||Rio Tinto (RIO)||2.76%|
How much do you have to invest in these top FTSE companies?
Therefore, for any investment you make in the FTSE 100 Index Fund, approximately 40% of the funds will flow to the top ten stocks. This means they will take about £40 from your £100 investment! The remaining £60 will be allocated to 90 other companies.
The top-heavy nature of this approach may cause you to miss the huge gains that small companies have achieved in the FTSE 100, because most of your money goes to top companies.
It is not a bad thing to structure funds in this way. But it is important that when you put your money into a tracking fund, you must understand how your money is invested.
Unfortunately, one of them Disadvantages of passive investment You don’t have much control. For example, you cannot send an email to the platform and request a reduction in the funds invested in energy stocks. You get what you give.
What other investment methods are there?
The good news is that if you don’t like fighting with the FTSE, you don’t have to invest in such a fund.Most praised Stock trading account Will enable you to obtain a wide range of investments. This will enable you to accurately pick out the projects you want to invest in.
If you are satisfied with the simple FTSE 100 tracking fund, please try Cheap stock trading account To reduce costs. Cheap fees are one of the main benefits of index funds, so don’t waste it by paying high fees.
Whether you decide to invest in index funds, individual stocks or a combination of the two, if you use Stocks and shares ISA, You don’t have to pay any taxes on your earnings.
Please always keep in mind that the value of an investment can go up or down. Therefore, it is worthwhile to make every effort to give yourself the greatest chance of success.
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