In 26 years time, the FT30 index will reach its centenary. It’s possible that none of the original constituents will still be in it when that landmark is reached. Some of today’s unknown fledgling companies may have been introduced to the index, along with companies that are currently a mere twinkle in the eye of an ambitious business school graduate.
Before speculating any further it’s worth looking over the history of the index. The index began life on 1 July 1935. It is the oldest continuous index in the UK, and one of the oldest in the world. With its 30 constituents, it was originally designed to "test the feel and changing moods of the equity marke" at a time when the number of listed shares was growing rapidly. The index is wholly owned by the FT, and the paper’s editor, together with the financial and statistics editors, decide if changes are to be made to its constituents.
As an equal-weighted geometric average, it differs from more recently established indices, which use market capitalisation, rather than individual share prices, as their basis. It also offers stability. Constituents change only when they have to. That’s usually because of takeover, nationalisation, bankruptcy, or lamentable share price performance. In the FTSE100 set-up, by contrast, as many as 10 companies a quarter can enter or leave the index.