The FTSE 100 vs FTSE 250
The FTSE 100 and FTSE 250 are UK stock indices which are composed of companies listed on the London Stock Exchange. However, each index offers a very different prospect to investors.
Understanding these differences is key for those looking to choose between these two investments. Keep reading to find out more about the FTSE 100 vs FTSE 250, what each index offers investors and which might be the better investment in 2026.
The information in this article is provided for educational purposes only and does not constitute financial advice. Consult a financial advisor before making investment decisions.
Key Takeaways:
- The FTSE 100 is composed of the 100 largest companies listed on the London Stock Exchange (LSE)
- The FTSE 250 consists of the 101st to the 350th largest companies on the LSE.
- The FTSE 100 has more global exposure, whereas the FTSE 250 is more domestically focused.
- Given their different areas of focus, some investors may choose to hold both in their portfolio.
What Are the FTSE 100 and FTSE 250?
The FTSE 100 and FTSE 250 are both stock indices which are composed of companies listed on the UK’s London Stock Exchange (LSE).
FTSE 100
The FTSE 100 is a blue chip stock index, established in 1984 and made up of the 100 largest companies listed on the LSE, in terms of market capitalisation.
Despite being listed in London, the components of the FTSE 100 have a large global presence, with approximately 70% of the index’s revenue being generated overseas.
FTSE 250
The FTSE 250 is a mid-cap index which was established in 1992 and is made up of the next 250 largest companies on the LSE after the FTSE 100.
In other words, if you ranked all the companies on the LSE in terms of market cap, in theory, the FTSE 250 should be composed of the 101st – 350th companies on that list (however, that might not always be the case).
Unlike the FTSE 100, the FTSE 250 is much more domestically focused. Consequently, the FTSE 250 is often viewed as a better barometer of the UK’s economic health.
The indices are rebalanced every quarter, at which point FTSE 250 companies may be promoted to the FTSE 100 and, conversely, FTSE 100 companies may be relegated to the FTSE 250.
FTSE 100 vs FTSE 250: Index Composition
In both the FTSE 100 and FTSE 250 individual companies are weighted according to their free-float market capitalisation. In other words, the bigger the company, the more influence it has over the index.
Top Companies
Due to the smaller number of constituents and the large size of the biggest companies, the performance of the FTSE 100 is highly concentrated in its top components. The top ten companies account for roughly half the index’s value.
Depicted: Top 5 Holdings of iShares Core FTSE 100 UCITS ETF – 2 February 2026. Weightings are approximate, based on daily ETF holdings and are subject to change.
Conversely, the largest components of the FTSE 250 have considerably less influence over the index, which is driven more by the collective performance of its components, rather than being dominated by a handful of big companies.
Depicted: Top 5 Holdings of iShares FTSE 250 UCITS ETF – 2 February 2026. Weightings are approximate, based on daily ETF holdings and are subject to change.
Sector Exposure
Besides individual companies, it’s also worth analysing which sectors the indices are exposed to.
The FTSE 100 has a relatively high exposure to defensive industries. Consumer staples, health care and utilities make up around a third of the entire index. On the other hand, the same three sectors account for less than 10% of the FTSE 250.
As for the FTSE 250, the mid-cap index has considerable exposure to the financial sector, which accounts for almost half of the index’s weighting.
It also has significant exposure to real estate and consumer discretionary industries, which account for more than 20% of the index. This is more than double the FTSE 100.
Consequently, of the two indices, the FTSE 100 has significantly more exposure to defensive industries, whilst the FTSE 250 is more exposed to cyclical industries.
FTSE 100 vs FTSE 250 Performance
Historically, the smaller FTSE 250 has often outperformed its blue chip rival. However, in the last few years, the FTSE 100 has pulled ahead, posting impressive growth since the pandemic and hitting record highs in the process.
The FTSE 100 vs FTSE 250 charts below, courtesy of TradingView, show the total percentage return of both indices in the ten-year period ending 31 December 2025 (percentages listed on the right).
As you can see, over the period, the percentage return of the FTSE 100 is almost double that of the FTSE 250. Although it should be noted that past performance is not a reliable indicator of future results.
Which Is the Better Investment in 2026?
This depends on what you want from your investment, as well as what your outlook is for 2026. Let’s look at each index individually.
FTSE 100
What do we know so far about the FTSE 100?
- Blue Chip: It’s composed of large cap, well-established companies.
- Global Exposure: The majority of its revenue is generated overseas.
- Defensive Industries: The index has a higher weighting towards non-cyclical, defensive industries.
The index’s composition of large, global companies, which earn the majority of their revenue abroad, makes it less exposed to the UK economy and more influenced by global conditions. Furthermore, this global exposure tends to result in the FTSE 100 having an inverse relationship with the GBP.
Its blue chip status and weighting towards defensive industries means that the FTSE 100 may be more stable than the FTSE 250 and potentially more resilient during a downturn.
This was evidenced in 2022, a year in which most major indices around the world posted steep losses. The FTSE 250 dropped 20% that year, whereas the FTSE 100 remained relatively flat, gaining 0.9% (neither figure accounts for dividends).
Moreover, the defensive and mature industries to which it is exposed have historically supported steady earnings, which in turn have supported dividend distributions.
Nevertheless, it’s worth noting that the same defensive industries which may offer stability and resilience may also limit the FTSE 100’s growth in a strong bull market. Indeed, pre-pandemic, the index often underperformed other indices, including the FTSE 250.
FTSE 250
And what about the FTSE 250?
- Mid-Cap: It’s composed of medium sized, less-established companies.
- Domestic Focus: Its constituent companies have more of a UK focus.
- More Cyclical: The index has a higher exposure towards cyclical industries.
These characteristics result in the FTSE 250 having a much different profile to the FTSE 100.
Its constituents earn more of their revenue domestically, meaning it is a lot more exposed to the UK economy and, unlike the FTSE 100, tends to be positively correlated with the GBP.
Of course, depending on your outlook for the UK, this could either be a positive or a negative. However, it’s worth noting that UK growth has been quite lacklustre in recent years.
Its mid-cap composition and greater exposure to cyclical industries may result in higher potential returns during periods of growth. However, as evidenced in 2022, it may also result in steeper losses during weaker economic conditions.
FTSE 100 vs FTSE 250
Choosing between these indices will depend on an investor’s outlook and objectives.
The FTSE 100 might appeal more to those looking for global exposure, stability and income potential. On the other hand, the FTSE 250 might appeal more to those who feel bullish about the UK economy and are looking for greater growth potential, even if it comes at the risk of greater volatility.
Given the different areas of exposure, the indices tend to react differently to the same economic environment. Consequently, some investors may choose to hold both in their portfolio. Indeed, many do.
How to Invest in the FTSE 100 and FTSE 250
In order to gain exposure to the FTSE 100 or FTSE 250, investors have two main options:
- Build a portfolio of individual FTSE 100 and/or FTSE 250 companies.
- Invest in a mutual fund or Exchange-Traded Fund (ETF) which tracks either index.
If the goal is to gain exposure to the entire index, the second option is likely to make the most sense, as mutual funds or ETFs allow investors to do so with a single investment.
In terms of options, there are plenty of funds available to investors, including the iShares FTSE 100 UCITS ETF and the iShares FTSE 250 UCITS ETF.
To get started, follow these steps:
- Register for an investing account with a broker which provides access to FTSE 100 and FTSE 250 ETFs and complete the onboarding process.
- Log in to your account and open the share dealing platform.
- Search for a FTSE 100 ETF or a FTSE 250 ETF and open the instrument page.
- Enter the number of shares you want to buy and send your order to the market.
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Frequently Asked Questions
What is the difference between the FTSE 100 and 250 and 350?
The FTSE 100 is composed of the 100 largest companies listed on the London Stock Exchange (LSE) whilst the FTSE 250 is composed of the next 250 largest. The FTSE 350 is an index which iscomposed of the 350 largest companies on the LSE (i.e. FTSE 100 + FTSE 250).
Does the FTSE 250 include the FTSE 100?
No. The FTSE 250 is composed of the next 250 largest companies listed on the London Stock Exchange after the 100 companies which are in the FTSE 100 (i.e. the 101st - 350th largest companies).
Is the FTSE 100 or 250 better for income?
Both indices consist of a variety of dividend paying stocks. Historically, the FTSE 100 has often had a higher dividend yield than the FTSE 250. However, at the time of writing, the FTSE 250 has a higher average yield.
Which index has had better returns historically?
This varies by period. Historically, the FTSE 250 has often outperformed the FTSE 100; however, in recent years, it’s the FTSE 100 which has provided better returns.
How often are the indices rebalanced?
The FTSE 100 and FTSE 250 are rebalanced quarterly, at which point companies may enter or leave each index.
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