FTSE All-Small

FTSE All-Small is a stock market index within the FTSE UK Index Series that represents the smaller-capitalisation segment of the UK equity market. It combines the constituents of the FTSE SmallCap and FTSE Fledgling indices and therefore provides broader coverage of smaller UK-listed companies than either index individually.

The FTSE All-Small is calculated and maintained by FTSE Russell, part of the London Stock Exchange Group (LSEG).

Composition

The FTSE All-Small combines:

• FTSE SmallCap;
• FTSE Fledgling.

A simplified relationship is:

$\text{FTSE All-Small}=\text{FTSE SmallCap}+\text{FTSE Fledgling}$

The FTSE SmallCap consists of smaller companies that are constituents of the FTSE All-Share Index, while the FTSE Fledgling consists of eligible companies that are too small to qualify for the FTSE All-Share.

Position within the FTSE UK Index Series

The principal structure of the UK equity indices can be represented as:

$\text{FTSE All-Share}=\text{FTSE 100}+\text{FTSE 250}+\text{FTSE SmallCap}$

The FTSE All-Small extends the smaller-company coverage by combining the FTSE SmallCap with the FTSE Fledgling:

$\text{FTSE All-Small}=\text{FTSE SmallCap}+\text{FTSE Fledgling}$

The FTSE All-Small should therefore not be confused with the FTSE All-Share. The former focuses on smaller companies, while the latter includes the FTSE 100, FTSE 250, and FTSE SmallCap.

FTSE SmallCap

The FTSE SmallCap represents companies within the FTSE All-Share that are below the market-capitalisation range represented by the FTSE 350.

These companies are larger than the companies generally represented in the FTSE Fledgling.

FTSE Fledgling

The FTSE Fledgling represents companies that are eligible for inclusion in the FTSE UK Index Series but are too small to qualify for inclusion in the FTSE All-Share.

The FTSE Fledgling therefore extends coverage to a smaller segment of companies than the FTSE SmallCap.

Unlike the FTSE All-Share, the FTSE Fledgling does not have a liquidity requirement for constituents.

Market capitalization

Market capitalization is generally calculated as:

$\text{Market Capitalization}=\text{Share Price}\times \text{Shares Outstanding}$

For index purposes, FTSE Russell applies additional rules concerning free float, investability, liquidity, nationality, listing, and other eligibility requirements.

Free-float adjustment

FTSE Russell uses free-float and investability adjustments in the construction of its equity indices.

A simplified representation is:

$\text{Free-Float-Adjusted Market Capitalization}=\text{Market Capitalization}\times \text{Free Float Factor}$

The actual methodology incorporates the applicable FTSE UK Index Series rules.

Index weighting

The FTSE All-Small uses market-capitalisation-based weighting, subject to applicable free-float and investability adjustments.

A simplified representation of a constituent's weight is:

$\text{Index Weight}=\frac{\text{Adjusted Market Capitalization of Constituent}}{\text{Total Adjusted Market Capitalization of Index}}\times 100\mathrm{\%}$

Consequently, larger constituents generally have a greater influence on the index than smaller constituents.

Index calculation

A simplified index calculation can be represented as:

$\text{Index Value}=\frac{\sum _{i=1}^n{\text{Adjusted Market Capitalization}}_i}{\text{Index Divisor}}$

The divisor is adjusted when necessary to account for corporate actions and changes in index composition.

This is intended to prevent events such as share splits, rights issues, or constituent changes from producing artificial movements in the index.

Index reviews

The FTSE All-Small is maintained through the review process of the FTSE UK Index Series.

Changes can result from:

• changes in market capitalization;
• changes in free float;
• changes in liquidity;
• new listings;
• delistings;
• corporate actions;
• changes in eligibility.

Companies can move between the FTSE 250, FTSE SmallCap, and FTSE Fledgling as their relative market capitalization and eligibility change.

FTSE All-Small and FTSE All-Share

The relationship between the principal indices can be summarized as:

$\text{FTSE All-Share}=\text{FTSE 350}+\text{FTSE SmallCap}$

where:

$\text{FTSE 350}=\text{FTSE 100}+\text{FTSE 250}$

The FTSE All-Small instead combines:

$\text{FTSE All-Small}=\text{FTSE SmallCap}+\text{FTSE Fledgling}$

Thus, the FTSE All-Small is a measure of the smaller-company segment rather than a comprehensive measure of the entire UK equity market.

Liquidity

Liquidity requirements differ between the components of the FTSE All-Small.

The FTSE SmallCap is subject to the applicable liquidity requirements of the FTSE UK Index Series.

The FTSE Fledgling does not have a liquidity requirement for constituents.

Consequently, the FTSE All-Small can include companies with substantially different levels of trading activity.

Investment characteristics

Companies represented in the FTSE All-Small are generally smaller than those represented in the FTSE 100 and FTSE 250.

Smaller companies can exhibit characteristics such as:

• lower trading liquidity;
• greater company-specific risk;
• higher price volatility;
• wider bid-ask spreads;
• greater sensitivity to domestic economic conditions.

These characteristics do not apply uniformly to every constituent.

Benchmark

The FTSE All-Small can be used as a benchmark for portfolios focused on smaller UK-listed companies.

A simplified active-return calculation is:

$\text{Active Return}=\text{Portfolio Return}-\text{Benchmark Return}$

The benchmark can therefore be used to compare the performance of a small-company investment portfolio with the broader smaller-company segment represented by the index.

Investment products

FTSE Russell indices can be used as benchmarks and as the basis for investment products such as:

• index funds;
• exchange-traded funds (ETFs);
• derivatives;
• structured products;
• other index-linked investments.

The availability of a specific investment product tracking the FTSE All-Small depends on the relevant market and product provider.

Importance

The FTSE All-Small provides a broad benchmark for the smaller-company segment of the UK equity market. By combining the FTSE SmallCap and FTSE Fledgling, it extends coverage beyond the companies included in the FTSE All-Share and provides a framework for measuring the performance of smaller eligible UK companies.

See also

• FTSE 100
• FTSE 250
• FTSE 350
• FTSE SmallCap
• FTSE Fledgling
• FTSE All-Share Index
• FTSE UK Index Series
• London Stock Exchange
• FTSE Russell
• London Stock Exchange Group
• Stock market index
• Market capitalization
• Free float
• Index fund
• Exchange-traded fund
• Benchmark (finance)
• Portfolio management
• Passive management