Derek Pain: The Thirty may be elderly but it shows the best of British
No Pain, No Gain
Saturday 09 July 2011
After years of obscurity, the FT30 share index is being given a little more prominence. Such a move is to be welcomed. After all, what was once the only measurement of the stock market's performance reflects, I believe, more accurately the British display than its successor, the FTSE 100 share index, more popularly known as Footsie.
The FT30 was born in 1935, and is the world's oldest surviving share index. It reigned supreme until 1984, when Footsie, with 100 shares, appeared. It did not surrender its authority immediately. Indeed quite a few newspapers, including The Independent, gave the old and the new equal billing. But gradually the FT30 slipped into near oblivion, although its movements continued to be recorded. Still, only the eagle-eyed could spot its daily display.
The Thirty, as its name implies, is composed of shares of 30 leading companies. Unlike Footsie, its constituents are home-grown. And in its early days it ignored exploration – too risky – and possibly naughty financial shares. Explorers, in the shape of BP, arrived in 1977, and NatWest (now Royal Bank of Scotland) appeared in 1984 as financials were belatedly given membership.
Its Britishness means the FT30 offers a rather more distinct mirror of the UK economy than Footsie, which is made up of top companies quoted in London, irrespective of their domicile. Besides the number of shares embraced, there are other differences. The FT30 gives equal weighting to its constituents (irrespective of their stock market value), whereas Footsie is weighted on capitalisations.
The method of selecting constituents is also different. Footsie membership can change every three months, with some constituents booted out for poor performances and their places taken by shares that have reacted more strongly. The FT30 is lumbered with its members. Changes occur only when a company has to be replaced because of a takeover or delisting. Even so, recruits are often from the same line of business as the departed.
There are only two survivors from the 1935 collection: Tate & Lyle and GKN (formerly known as Guest, Keen & Nettlefolds). Such icons of past years such as Austin Motor and Bass have disappeared. In 1935, Harrods and Woolworth's, as substantial quoted companies, were included. So, of course, was Imperial Chemical Industries, once the bellwether of British industry; it survived until a few years ago, when it fell to a Dutch group. One initial member, the Bolsover Colliery, went out with coal nationalisation after the Second World War.
The make-up of the FT30 has restrained growth and allowed Footsie to give a more reflective view of the stock market. The Thirty's criteria for membership means that fast-growing companies can be excluded, whereas Footsie's open-door policy allows it to quickly recruit shares on the move, such as exploration and technology stocks. Since the FT30's creation, at 100 points, I think its lowest level was 45 points at the outbreak of hostilities in 1939. It is estimated that to have kept pace with inflation it should now be around 3,700. Last week it closed at 2,216.
It could be argued that the FT30 was never primarily an investment tool but more an indication of the country's business profile. The FT30's staid reputation – and obscurity – is in sharp contrast to Footsie. Yet its successor's more rip-roaring approach has its drawbacks. Sir Richard Lambert, a former Financial Times editor, believes Footsie is providing "a cloak of respectability and lots of passive investors for companies that challenge the canons of corporate governance". He cites as examples a number of overseas mining enterprises.
One company courting controversy is the miner Eurasian Natural Resources, where independent directors, including the highly regarded Sir Richard Sykes, were unceremoniously ousted from the board last month. Normally Footsie requires 25 per cent of a company's shares to be in public hands. But in the case of Eurasian Natural this rule was waived, and only some 18 per cent of its capital went to outside investors. It seems that tracker funds, obliged to invest in the miner because of its Footsie membership, are less than impressed by the boardroom upheaval and the post-flotation share performance.
- 1 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Mystery man who gave mum heart-warming note on train 'wanted to put a smile on her face'
- 4 Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
- 5 Grumpy Roald Dahl letter warning student to 'eschew beastly adjectives' rediscovered after 35 years
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
iJobs Money & Business
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...
£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village