FTSE Small Cap: Market Composition and Sector Insight

Highlights

• Tracks small-cap companies listed on the London Stock Exchange Main Market.

• Includes a diverse range of sectors such as industrials, healthcare, and technology.

• Index reviewed quarterly based on market capitalization and liquidity thresholds.

The FTSE Small Cap index captures the performance of smaller companies listed on the London Stock Exchange's Main Market. It includes constituents that fall below the threshold of the FTSE 250 in terms of market capitalization. These companies span sectors such as industrial engineering, pharmaceuticals, real estate, construction, technology, and food production. The index reflects business activity within the small-cap segment and contributes to the broader FTSE UK Index Series.

Eligibility and Inclusion Criteria

Companies included in the FTSE Small Cap must meet specific eligibility rules related to free float, liquidity, and domicile status. Entities must be incorporated or listed in the UK and pass standard screening procedures for index inclusion. Market capitalization rankings play a central role in determining placement, with the index sitting just below the FTSE 250 in the broader market hierarchy.

Sector Breakdown and Industry Spread

The FTSE Small Cap covers a diverse set of industries, with strong representation from construction materials, industrial services, software development, medical equipment, and food retail. The index offers visibility into emerging and mid-stage enterprises that operate on a national and international scale. Sector weighting changes over time based on relative market valuations and index rebalancing schedules.

Index Methodology and Maintenance

The index is reviewed and adjusted quarterly by the FTSE Russell committee. The process involves ranking all eligible companies by full market capitalization and applying standard liquidity screens. Constituents may be promoted or demoted to and from the index depending on their relative market position. Methodology documentation ensures transparent inclusion and removal criteria.

Pricing and Reporting Structure

FTSE Small Cap index values are published throughout the trading day based on the aggregate value of its constituents. Real-time pricing enables accurate tracking of index-level movements. Each company’s weight in the index corresponds to its market capitalization, ensuring proportional representation in index calculations.

Market Function and Segment Role

The FTSE Small Cap functions as a benchmark for companies that are neither large-cap nor part of the FTSE 250. It provides structure to the lower-tier segment of the UK equity market, supporting market classification and indexing efforts. The index is often referenced for economic insights into the performance of smaller-sized publicly listed entities.

Rebalancing Frequency and Data Transparency

Quarterly reviews ensure the FTSE Small Cap remains current with market developments. Changes to the index are announced publicly, and methodologies are documented and accessible. This transparency supports consistency and accuracy in how the index reflects its underlying segment.