Major Stock Market Indexes UK Investors Should Know

The major stock market indexes UK investors actually need to understand are the FTSE 100, FTSE 250, FTSE All-World, MSCI World, MSCI Emerging Markets, S&P 500 and Nasdaq 100. Together those seven cover almost every passive ETF you can buy on a UK platform, and they each own very different things underneath the label.

These indexes are not investments themselves. They are scoreboards. Each one is a recipe that picks a group of companies, weights them in a particular way, and then publishes a single number every day to tell you how that group has done. When you buy an index fund or ETF, you are buying a fund that has been built to copy one of those recipes as closely and cheaply as possible.

For UK investors, knowing what is actually inside the main indexes matters more than people think. Two funds that both call themselves "global" can have wildly different exposures to US tech, to UK banks, or to Chinese internet companies. This article walks through the indexes that show up most often on UK investing platforms, what each one actually owns, what its history looks like, and where the hidden concentrations are buried.

Contents

• What is a stock market index?
• The S&P 500
• The FTSE 100
• The FTSE 250
• The MSCI World
• The FTSE All-World
• The Nasdaq 100
• The MSCI Emerging Markets
• Other indexes worth knowing
• Average annual returns of major indexes
• Frequently Asked Questions

What is a stock market index?

A stock market index is a rules-based list of companies, combined with a weighting method, that produces a single number tracking the average performance of that group. Most major indexes (S&P 500, FTSE 100, MSCI World) are weighted by free-float market capitalisation, meaning a company's weight is set by the value of its publicly tradeable shares. A bigger company gets a bigger slot.

This sounds neutral, but it has a side effect that surprises a lot of beginners. As a single company grows, it takes up more of the index, which means it has more influence on returns. By 2024, the top 10 companies in the S&P 500 made up about 35% of the entire index. So when you buy an "S&P 500" ETF, you are buying something that is more concentrated than its 500-stock label suggests.

Some indexes use different weighting methods (equal-weighted, fundamental-weighted, dividend-weighted), but the vast majority of UK-available passive funds track market-cap-weighted indexes. That is the default unless you have actively chosen otherwise.

The S&P 500

The S&P 500 tracks the 500 largest US companies listed on the NYSE and Nasdaq. It was launched in its current form in 1957 and is maintained by S&P Dow Jones Indices, with companies added and removed quarterly by an internal committee.

Holdings: 500 companies, but heavily top-heavy. Apple, Microsoft, Nvidia, Amazon, Alphabet (two share classes), Meta, and Tesla together typically account for around 30% of the index.

Sector split (approximate, 2026):

• Information Technology: ~30%
• Financials: ~13%
• Healthcare: ~11%
• Consumer Discretionary: ~10%
• Communication Services: ~9%
• Industrials: ~8%
• Consumer Staples: ~6%
• Energy, Utilities, Real Estate, Materials: ~13% combined

Long-run return: The S&P 500 has produced roughly 10% per year in nominal USD total return since 1957, or about 6.5-7% in real (inflation-adjusted) terms. Annualised real returns over rolling 30-year periods have ranged from roughly 3% to over 9%, depending on the start date.

Hidden bias: The S&P 500 is not the US economy. It is the largest US-listed companies, which today means it is dominated by global software and platform businesses. Smaller US companies, private companies, and the entire small-cap economy live elsewhere.

The FTSE 100

The FTSE 100 tracks the 100 largest companies listed on the London Stock Exchange by market cap. It launched in 1984 with a base value of 1,000 and is maintained by FTSE Russell.

Holdings: 100 companies, but with a quirk that matters. Roughly 75-80% of FTSE 100 company revenues come from outside the UK. Shell, BP, AstraZeneca, HSBC, Unilever and the mining giants earn most of their money in dollars, euros, and emerging market currencies. The FTSE 100 is more accurately described as "global multinationals that happen to list in London."

Sector split (approximate, 2026):

• Financials (banks and insurers): ~20%
• Energy: ~12%
• Consumer Staples (Unilever, Diageo, BAT, Reckitt): ~15%
• Materials (mining): ~10%
• Healthcare: ~11%
• Industrials: ~10%
• Communication Services, Utilities, Real Estate: ~12% combined
• Technology: under 2%

Long-run return: Total returns of around 7-8% annualised in GBP terms since 1984, with an unusually high contribution from dividends. The FTSE 100 typically yields 3.5-4.5%, well above the S&P 500's 1.3-1.5%.

Hidden bias: Almost no domestic technology, no growth tech of global importance, and a heavy reliance on a handful of mega-cap commodity, finance and consumer staples names. Strong currency translation effects when sterling moves.

The FTSE 250

Often called the "real UK economy" index, the FTSE 250 tracks the 101st to 350th largest London-listed companies. It is more domestic than the FTSE 100, with around 50% of revenue earned in the UK. It is also more cyclical and more interest-rate sensitive.

The index has historically been more volatile than the FTSE 100 but with higher long-run returns over multi-decade periods. Sector exposure tilts toward financials (especially asset managers and insurers), industrials, real estate and consumer discretionary names.

If you want a true bet on the UK economy itself rather than on London-listed multinationals, the FTSE 250 (or a UK All-Share fund) is a better instrument than the FTSE 100.

The MSCI World

The MSCI World tracks roughly 1,400 large- and mid-cap companies across 23 developed markets. Despite the "World" name, it does not include any emerging markets. China, India, Brazil, Taiwan and Saudi Arabia are all excluded.

Geographic split (approximate, 2026):

• United States: ~70%
• Japan: ~6%
• United Kingdom: ~3.5%
• Canada: ~3%
• France, Germany, Switzerland: ~7-8% combined
• Rest of developed world: ~10%

Sector split: Similar shape to the S&P 500 because the US dominates the index, but slightly less tech-heavy thanks to European and Japanese consumer, industrial and financial names.

Long-run return: Annualised returns of around 8-9% nominal in USD since 1970. The 70% US weighting means MSCI World performance is heavily driven by what happens in New York. In years where the US lags (like much of the 2000s), the MSCI World lags too.

The FTSE All-World

The FTSE All-World goes one step further than the MSCI World by including emerging markets. It tracks roughly 4,300 companies across both developed and emerging markets, covering about 90-95% of investable global market cap.

Geographic split (approximate, 2026):

• United States: ~62%
• Developed Europe: ~13%
• Japan: ~6%
• Emerging Markets (China, India, Taiwan, Korea, Brazil): ~10%
• Rest of developed world: ~9%

For UK investors, a single FTSE All-World tracker like Vanguard's VWRP or VWRL is a complete equity portfolio in one ticker. You own a slice of nearly every investable public company on Earth, weighted by market cap, rebalanced automatically. There is a strong case that this should be the default for most people, with everything else being a deliberate deviation.

The Nasdaq 100

The Nasdaq 100 tracks the 100 largest non-financial companies listed on the Nasdaq exchange. It is heavily concentrated in technology, communication services and consumer discretionary, with very little exposure to financials, energy or utilities.

Holdings: 100 companies, but with extreme top-heaviness. The "Magnificent Seven" alone (Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, Tesla) typically make up around 45-50% of the index.

Long-run return: Nominal returns of roughly 13-14% annualised since 1985, though with periods of brutal drawdown. The Nasdaq 100 fell around 80% peak-to-trough during the dot-com bust between 2000 and 2002, and took 15 years to recover its previous high in nominal terms.

The Nasdaq 100 is best understood as a leveraged bet on US large-cap tech. Anyone holding it as a "diversified" core position has misread what they own.

The MSCI Emerging Markets

The MSCI Emerging Markets tracks around 1,300 companies across 24 emerging-market countries. The composition is more concentrated than people expect.

Geographic split (approximate, 2026):

• China: ~25-28%
• India: ~20%
• Taiwan: ~20% (TSMC alone is around 10% of the entire index)
• South Korea: ~10-12%
• Brazil, Saudi Arabia, Mexico, South Africa: ~15% combined

Emerging markets have lagged developed markets badly over the 2010-2024 period, returning roughly 3-4% annualised in USD against 11-12% for the S&P 500. The structural case for emerging markets relies on faster economic growth, lower starting valuations and demographic tailwinds, but the past 15 years have been a reminder that none of those guarantees market returns.

Other indexes worth knowing

A handful of additional indexes turn up frequently on UK platforms, usually wrapped in a UCITS ETF:

• Russell 2000: US small-cap index of around 2,000 companies. Useful for adding small-cap exposure that the S&P 500 misses.
• Euro STOXX 50: The 50 largest blue-chip companies across the eurozone. Heavy on French and German industrials, luxury, and financials.
• Nikkei 225 / TOPIX: The two main Japanese indexes. Nikkei is price-weighted (unusual). TOPIX is market-cap-weighted and broader.
• MSCI ACWI (All Country World Index): The MSCI equivalent of the FTSE All-World. Same idea, slightly different composition.
• MSCI World Small Cap and MSCI World Value: Factor-tilted slices of developed-market equities.
• Bloomberg Global Aggregate Bond: Not a stock index, but the most-tracked global bond benchmark.

Average annual returns of major indexes

Average annual returns for the major indexes look reassuringly high in long-run charts: roughly 7-10% nominal, or 5-7% real after inflation, depending on the index and the period. Two warnings before you anchor on those numbers.

First, those numbers are averages, not annual outcomes. Real markets deliver extreme years, both up and down. The S&P 500 has had calendar years where it gained over 30% and years where it lost more than 35%. The "average" is just the geometric mean of those swings.

Second, regional indexes go through long stretches of underperformance. The MSCI Japan returned almost nothing for the 25 years after 1990. The S&P 500 returned roughly 0% in nominal terms over 2000-2009 ("the lost decade"). The FTSE 100 underperformed global equities significantly during the 2010s. Diversification across indexes is what protects you from being unlucky enough to bet your savings on the wrong one.

If you want to play with how those long-run averages compound on your own savings, the compound interest calculator will show you what 6% real returns over 30 years actually look like.

Frequently Asked Questions

Which stock market index is best for UK investors?

For most people, a single FTSE All-World or MSCI ACWI tracker is the most defensible default. It owns roughly 60% US, 25% other developed markets, and 10-15% emerging markets at market-cap weights, with no need for the investor to predict which region will win. Anything else (S&P 500-only, FTSE 100-heavy, Nasdaq 100) is a deliberate active bet, even if the underlying fund is passive.

What is the difference between the FTSE 100 and the S&P 500?

The FTSE 100 holds 100 London-listed companies that earn most of their revenue overseas, with heavy exposure to energy, banks, miners and consumer staples, and a high dividend yield. The S&P 500 holds 500 US-listed companies dominated by technology, growth-oriented services and healthcare, with a much lower yield and historically higher capital growth. They are not substitutes for each other.

How many companies are in the MSCI World?

Around 1,400 large- and mid-cap companies across 23 developed markets. It does not include emerging markets, small-caps, or micro-caps. If you want broader coverage, the FTSE All-World (around 4,300 stocks) and MSCI ACWI IMI (around 9,000 stocks) extend the universe.

What is the long-run real return of global equities?

Most academic studies (the UBS Global Investment Returns Yearbook by Dimson, Marsh and Staunton is the standard reference) put the long-run real return of global equities at roughly 5-5.5% per year over the past 124 years. That is the after-inflation, dividend-reinvested figure. UK equities specifically have been close to this average. US equities have been slightly above, around 6.5-7% real.

Should I just buy the S&P 500?

It has worked brilliantly for the past 15 years, but that is recent history, not a law of physics. The S&P 500 is one country, one currency, and increasingly concentrated in a handful of mega-cap tech names. A global tracker gives you the same upside if the US continues to dominate, plus a parachute if it does not. Concentration risk is invisible until it is the only thing that matters.

Read Next

• What Is the S&P 500? A UK Investor's Guide
• What Is the FTSE 100?
• Popular UCITS ETFs for UK Investors
• VWRP vs VWRL: Which Vanguard Tracker Wins?
• How to Start Investing in Index Funds (UK)

Further Reading

The Little Book of Common Sense Investing - John Bogle - The clearest case ever made for owning the whole market through low-cost index funds rather than picking winners. (Affiliate link - we may earn a small commission at no extra cost to you.)

Smarter Investing - Tim Hale - The UK-focused playbook for building a passive, evidence-based portfolio around broad index trackers. (Affiliate link - we may earn a small commission at no extra cost to you.)