When you start investing, the number of ETFs and markets can feel overwhelming. A key feature of ETFs is that many are designed to track an index, making it easier to invest in a whole market or sector.
An index is simply a group of companies or bonds used to measure how a particular market, country, sector, or region is performing.
Here are some of the main indices UK investors are likely to encounter.
FTSE 100
The FTSE 100 tracks the 100 largest companies listed on the London Stock Exchange. These are typically large, well-known businesses, many of which generate a significant share of their revenues overseas. As a result, the FTSE 100 is influenced by global economic conditions and currency movements, not just the UK economy.
It is more heavily weighted towards sectors such as energy, financials, and consumer staples, with less exposure to technology. For beginners, it offers a snapshot of the largest UK-listed companies. Investors can access the FTSE 100 via ETFs such as iShares Core FTSE 100 UCITS ETF (CUKX) and Vanguard FTSE 100 UCITS ETF (VUKG).
FTSE All-World Index
The FTSE All-World Index provides broad exposure to global stock markets in a single index. It includes thousands of companies across both developed and emerging markets, spanning North America, Europe, Asia, and Latin America.
This index is often used to track global equity performance and diversify investments across countries, sectors, and currencies. Investors can access the FTSE All-World via ETFs such as Invesco FTSE All-World UCITS ETF (FWRG) and Vanguard FTSE All-World UCITS ETF (VWRL).
S&P 500 Index
The S&P 500 tracks 500 of the largest companies listed in the United States and is widely regarded as a barometer for the US stock market. It includes many household names, particularly in technology, healthcare, and consumer sectors, such as Apple, Microsoft, Nvidia, and Alphabet.
For UK investors, the S&P 500 provides exposure to the US economy, which has historically been a major driver of global market returns. ETFs tracking this index include Invesco S&P 500 UCITS ETF (SPXP) and Vanguard S&P 500 UCITS ETF (VUAG).
Nasdaq 100 Index
The Nasdaq 100 tracks 100 of the largest non-financial companies listed on the Nasdaq exchange in the US. It is heavily weighted towards technology and innovation-focused sectors, including software, semiconductors, and consumer technology.
Because of this concentration, the Nasdaq 100 can experience larger swings than broader indices. It is often used to represent growth-oriented segments of the US market. Investors can access the Nasdaq 100 via ETFs such as Invesco Nasdaq 100 UCITS ETF (EQQQ) and iShares Nasdaq 100 UCITS ETF (CNX1).
Why Indices Matter
Understanding these indices helps you interpret market news, compare investment performance, and see what your investments are actually exposed to. They also demonstrate the benefits of diversification: by tracking an index rather than buying individual shares, investors spread risk across multiple companies, sectors, and countries.
For beginners, starting with index-tracking ETFs can be an effective way to enter the market with lower costs and less complexity. Learning how indices work is an essential first step toward building confidence, developing a long-term investment approach, and understanding how different parts of the global economy interact.
“Whichever index you’re interested in following, one of the simplest and most cost-effective ways to gain exposure to it will be through an ETF. ETFs that track major indices such as the FTSE All-World, Nasdaq-100 or S&P 500 are generally available for a low annual fee, and they aim to provide the index performance less that low fee.”
Chris Mellor, Head of EMEA ETF Equity Product Management at Invesco
How can I access these stock markets on InvestEngine?
You can access these stock markets on InvestEngine by investing in index-tracking ETFs through a Stocks and Shares ISA, SIPP, General Investment Account, or Business Account. InvestEngine offers a wide range of low-cost ETFs that track major indices such as the FTSE 100, FTSE All-World, S&P 500, and Nasdaq 100. You can build a diversified DIY portfolio and add these index tracking ETFs into your chosen portfolio mix.
With features such as fractional investing, you can start from as little as £1 per ETF, and with Savings Plans you can invest regularly to spread your money over time.
Key takeaways
For UK beginner investors, stock market indices provide a simple way to understand how different parts of the global market are performing. Indices such as the FTSE 100, FTSE All-World, S&P 500, and Nasdaq 100 each offer exposure to different regions, sectors, and risk profiles, from large UK-listed companies to fast-growing US technology firms and broad global markets.
Using index-tracking ETFs allows investors to access this diversification in a simple, low-cost way, without needing to pick individual shares. By understanding what each index represents and how they differ, you can make more informed decisions, build confidence over time, and take a long-term approach to investing.
Take a look at our Collection, which houses global indices, country and region specific ETFs, to get started.
FAQs on key stock market indices
- What is a stock market index in simple terms? A stock market index is a collection of companies or bonds that shows how a particular market, country, or sector is performing. It acts as a benchmark rather than an investment you buy directly.
- Why do beginner investors often start with index-tracking ETFs? Index-tracking ETFs let beginners invest in many companies at once, helping spread risk and reduce complexity. They are usually low-cost and avoid the need to pick individual shares.
- What does the FTSE 100 tell UK investors? The FTSE 100 shows how the largest companies listed in the UK are performing. Because many earn money overseas, it reflects global conditions as much as the UK economy.
- How is the FTSE All-World Index different from the FTSE 100? The FTSE All-World Index tracks global markets across developed and emerging countries, while the FTSE 100 only covers large UK-listed companies.
- What is the S&P 500 and why is it so widely followed? The S&P 500 tracks 500 of the largest US companies and is often used as a measure of the US stock market. It includes many global technology and consumer brands.
- What makes the Nasdaq 100 higher risk than other indices? The Nasdaq 100 is heavily weighted towards technology and growth companies. This concentration can lead to larger price swings compared with broader indices.
- Do stock market indices include emerging markets? Some do. Global indices like the FTSE All-World include both developed and emerging markets, while others, such as the FTSE 100 or S&P 500, do not.
- Can UK investors invest in US and global indices? Yes. UK investors can access US and global indices through UCITS-compliant ETFs listed in the UK and Europe, rather than buying shares directly overseas.
- How do indices help with diversification? By tracking many companies across sectors and countries, indices spread risk more widely than individual shares. This is one of the main reasons they are popular with beginners.
- How can I invest in these indices on InvestEngine? You can invest in ETFs tracking indices like the FTSE 100, FTSE All-World, S&P 500, and Nasdaq 100 through an ISA, SIPP, GIA, or Business Account on InvestEngine. Fractional investing and Savings Plans make it possible to start small and invest regularly.
Important information
Content issued by InvestEngine, in paid partnership with Invesco. Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.
Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.