The Financial Times Stock Exchange (FTSE) AIM 100 is a market index that tracks the performance of the top 100 companies by market capitalization, listed on the London Stock Exchange Alternative Market. The index contains a mixture of stocks from well-established companies as well as venture capital-backed startups. It also consists of stocks of mature organizations looking to expand.
Launched in 1995, the index has evolved over the years to reflect changes that have taken place in the U.K stock market, involving mergers and acquisitions. A company does not need to be British to be listed in the FTSE 100 AIM. However, the company must have its primary listing on the Alternative Investment Market.
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FTSE AIM Listing Requirements
The Alternative Investment Market is a subset of the LSE that comprises small or less-viable companies. The market allows these companies to float their shares in a more flexible regulatory system. At launch, the market had only ten companies. It has since evolved to contain over one thousand companies. AIM is an unregulated market, which means it does not follow European directives to the letter as implemented by other markets.
The London Stock Exchange established the AIM platform as a way of offering smaller companies an option for raising capital with a pragmatic approach to financial regulation. Since its inception, companies have raised close to £34 billion in the process.
In addition to listing in the Alternative Investment Market, a company must report its quarterly financial results to the FTSE Group. A company must also meet the minimum requirements for liquidity.
The top ten listed companies in the FTSE AIM 100 index are ASOS, Fevertree Drinks, Burford Capital, Hutchinson China Meditech, Abcam PLC, Boohoo.com, Blue Prism Group, Plus500 Ltd, Dart Group and RWS Holdings.
The FTSE Russell reviews the index quarterly, and the constituents of the index may change upon review. Market value is one of the factors taken into consideration when adding or removing a company’s stock from the index. In addition, the index may contain companies listed in the FTSE aim 50 Index.
The index is often used to gauge the prosperity of companies regulated in the U.K. The FTSE Group, a subsidiary of the LSE, maintains the index and often reviews it to ensure only the top 100 companies are listed.
The diversity of companies listed in the index means the value of the pound significantly affects the FTSE AIM 100 value. For that reason, weakness in the pound relative to the dollar, most of the time, leads to dollar-based companies to be more valuable and have a greater impact on the index rating.
In addition, the fact that the index consists of foreign companies means it cannot be used as an indicator of the U.K economy.
The fact that a vast number of companies in the index have operations overseas, the index cannot be relied upon to paint a picture of the U.K economy. Likewise, the index paints a clear picture of international and economic events given the companies listed, do business around the world.
