What is the FTSE 250?
The FTSE 250 tracks the 101st to 350th largest LSE-listed companies and is considered a better gauge of the UK domestic economy than the globally-oriented FTSE 100.
The FTSE 250 covers the 101st through 350th largest companies by free-float market capitalisation listed on the London Stock Exchange, making it the index immediately below the FTSE 100 in the FTSE UK Index Series. Together the two form the FTSE 350, which captures the UK's 350 largest listed businesses.
Where the FTSE 100 is heavily skewed toward multinationals that earn most of their revenues overseas, the FTSE 250 contains a far higher proportion of companies that depend on the UK domestic economy. Housebuilders, retailers, media groups, UK-focused banks, and travel companies feature prominently. This means the FTSE 250 tends to be more sensitive to UK-specific factors: consumer confidence, the Bank of England base rate, sterling movements, and domestic political events such as general elections or budgets.
The quarterly FTSE Russell review determines which companies enter or leave the 250. A company promoted from the 250 into the FTSE 100 typically sees institutional buying as tracker funds rebalance; a company relegated from the 100 into the 250 may face selling pressure for the same reason. These "quad-witching" rebalancing dates — the third Friday of March, June, September, and December — can generate elevated volatility in stocks near the boundary.
For investors trying to form a view on the British economy rather than global commodity prices or dollar revenues, the FTSE 250 is often the more relevant benchmark. A sustained divergence between FTSE 100 strength and FTSE 250 weakness frequently signals that global tailwinds are masking domestic stress.