What Is The FTSE 250, and How Does It Work?

The FTSE 250 is the UK's leading growth stock market index delivering an average annual return of 10.6% since its inception.

by | Last updated 2 Mar, 2023 | Index Investing

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The FTSE 250 is the second most popular index used by British investors to benchmark their portfolio returns. It’s a market capitalisation-weighted index that contains the largest 101st to 350th companies listed on the London Stock Exchange.

The FTSE 250 was launched in October 1992, approximately eight years after the UK’s flagship index, the FTSE 100. It has since become popular among growth investors as the index primarily contains mid-cap and small-cap stocks that offer superior potential capital gains. And more aggressive passive investors often pick the FTSE 250 when selecting an index fund.

How does the FTSE 250 work?

The FTSE 250 contains 250 stocks selected based on their market cap. As of November 2022, the index’s total market value stood at just over £333.69bn. That means the FTSE 250 contains roughly 8.8% of the £3.78trn market cap of all companies listed on the London Stock Exchange.

To be included in the index, a business needs to have at least the 350th largest market capitalisation in the United Kingdom. However, the stock also needs to have a market cap that is less than the 100th largest company. If it exceeds this limit, the business will join the FTSE 100 index instead, kicking out an existing member who will fall into the FTSE 250.

Just like the FTSE 100, the FTSE 250 is rebalanced every quarter in March, June, September, and December. A company’s position within the index is also often volatile, especially for stocks near the bottom of the list. Why? Because these smaller businesses are typically subject to increased trading volatility.

Being a capitalisation-weighted index, the constituent stocks with the largest market caps within the index have a higher weighting than the smallest. As such, the share price movement of these larger enterprises has a bigger impact on the level of the index.

As of January 2023, the ten largest UK stocks within the FTSE 250 index include:

  1. Hiscox (LSE:HSX)
  2. Investec (LSE:INVP)
  3. Mediclinic International (LSE:MDC)
  4. Inchcape (LSE:INCH)
  5. Hikma Pharmaceuticals (LSE:HIK)
  6. IMI (LSE:IMI)
  7. Diploma (LSE:DPLM)
  8. Greencoat UK Wind (LSE:UKW)
  9. Intermediate Capital Group (LSE:ICP)
  10. Howden Joinery Group (LSE:HWDN)

What is the average return on FTSE 250?

The FTSE 250 was first launched in October 1992. And since then, its constituents have grown considerably. The index’s total return (capital gains + dividends) over the last 30 years is approximately 1,947%. On an annualised basis, that’s the equivalent of a 10.6% annual return on investment.

That’s significantly ahead of the FTSE 100’s 7.15% average annual return to investors. And when compounded over decades, the 3.45% difference has an enormous impact.

Suppose an investor bought £10,000 worth of shares in an exchange-traded fund tracking the FTSE 250 back in 1992. In that case, their investment would be roughly worth £251,663 today. By comparison, the same investment in the FTSE 100 would be worth closer to £84,878 – a £166,785 difference.

However, this higher rate of return is not without its caveats. As previously mentioned, the FTSE 250 predominantly consists of mid and small-cap stocks, which opens the door to increased volatility. And in the short term, the index can significantly underperform.

For example, in 2022, the FTSE 250 fell by nearly 20% during the stock market correction. By comparison, the FTSE 100 was flat.

FTSE 250 vs other indices

The FTSE 250 isn’t the only benchmark index widely used to track the performance of the British stock market. Others include the previously mentioned FTSE 100, FTSE 350, and FTSE AIM 100. But how do these compare?

FTSE 250 vs FTSE 100

The FTSE 100 was launched in January 1984 and contains the largest 100 publically traded stocks on the London Stock Exchange by market cap. It is also rebalanced on the same quarterly schedule as the FTSE 250 and is similarly weighted based on the market capitalisation of its constituent shares.

The returns generated by the FTSE 100 have been less impressive. However, the larger size of its constituents provides far more defence against market volatility. Furthermore, as most of the businesses within the index are mature, the majority pay a handsome dividend, more so than the companies inside the FTSE 250.

As such, the average dividend yield for the FTSE 100 stands close to 4.1% versus the FTSE 250’s 3.2%. This makes the FTSE 100 a more popular choice among conservative-income investors.

FTSE 250 vs FTSE 350

The FTSE 350 is a capitalisation-weighted index that contains the 350th largest companies on the London Stock Exchange. In effect, it serves as a combination of the FTSE 100 and the FTSE 250, giving investors exposure to large-cap, mid-cap, and small-cap UK stocks.

Due to the increased diversity across companies of different sizes, some professional traders believe it to be a more accurate proxy for the state of the British economy. Despite this, it remains a largely unpopular index compared to the FTSE 100.

Since July 1994, the index has delivered a total return of approximately 746% as of December 2022. That’s the equivalent of 7.9% on an annualised basis.

FTSE 250 vs FTSE AIM 100

The FTSE AIM 100 is another market cap-weighted stock index. It was launched on 16 May 2005 and contains the largest 100 stocks listed on the Alternative Investment Market (AIM). AIM is a subsection of the London Stock Exchange. And it’s home to typically tiny businesses that are too small to be listed on the main exchange.

As such, even though the index contains the most prominent companies listed on AIM, these are still small-cap stocks. And several firms venture into micro-cap and penny stock territory.

FTSE 250 index sector weightings

Companies within the FTSE 250 cover a broad range of industries. However, the index itself is generally a poor proxy for the UK economy. Why? Because the vast majority of FTSE 250 stocks reside within the financials sector.

Consumer Discretionary13.76%
Consumer Staples3.35%
Real Estate8.50%
Source: FTSE Russell FTSE 250 Index Factsheet

List of all FTSE 250 companies

FOUR4imprint Group plcCommunications
888888 HoldingsConsumer Discretionary
ASLAberforth Smaller Companies TrustFinancials
AGKAggreko plcIndustrials
AAFAirtel Africa plcCommunications
AJBAJ Bell PlcFinancials
ATSTAlliance Trust plcFinancials
APAXApax Global Alpha LimitedFinancials
ASCLAscential PlcIndustrials
ASHMAshmore Group plcFinancials
AGRAssura plcReal Estate
AMLAston Martin LagondaIndustrials
AVSTAvast plcTechnology
AGTAVI Global Trust plcFinancials
BMEB&M European Value Retail SAConsumer Discretionary
BABBabcock International GroupIndustrials
BGFDBaillie Gifford Japan Trust plcFinancials
BAKKBakkavor Group PlcConsumer Staples
BBYBalfour Beatty plcIndustrials
BGEOBank Of Georgia Group PlcFinancials
BNKRBankers Investment Trust plcFinancials
BAGBarr (A.G.)Consumer Staples
BBABBA Aviation plcIndustrials
BBGIBBGI Sicav SAFinancials
BEZBeazley plcFinancials
BWYBellway plcReal Estate
BYGBig Yellow GroupReal Estate
BCGBaltic Classifieds GroupCommunications
BRSCBlackRock Smaller Companies TrustFinancials
BCPTBMO Commercial Property Trust LtdFinancials
BGSCBMO Global Smaller Companies PLCFinancials
BOYBodycote plcIndustrials
BVSBovis Homes Group plcReal Estate
BRWBrewin Dolphin Holdings plcFinancials
BVICBritvic plcConsumer Staples
CNECairn Energy plcEnergy
CLDNCaledonia Investments plcFinancials
CPICapita plcReal Estate
CAPCCapital & Counties Properties plcIndustrials
CARDCard Factory plcConsumer Discretionary
CEYCentamin plcMaterials
CINECineworld Group plcConsumer Discretionary
CTYCity Of London Investment TrustFinancials
CKNClarkson plcIndustrials
CBGClose Brothers Group plcFinancials
CLICLS Holdings plcReal Estate
COACoats Group plcMaterials
COBCobham plcIndustrial
CCCComputacenter plcTechnology
GLOContourGlobal plcUtilities
CTECConvaTec Group PlcHealthcare
CSPCountryside Properties PlcReal Estate
CWKCranswick plcConsumer Staples
CRSTCrest Nicholson Holdings plcReal Estate
DJANDaejan Holdings plcReal Estate
DPHDechra Healthcare plcHealthcare
DLNDerwent London plcReal Estate
DPLMDiploma plcIndustrials
DLGDirect Line Financials Group plcFinancials
DC.Dixons Carphone plcConsumer Discretionary
DOMDomino’s Pizza Group plcConsumer Discretionary
DRXDrax Group plcUtilities
DNLMDunelm Group PlcConsumer Discretionary
EZJeasyJet plcConsumer Discretionary
EDINEdinburgh Investment Trust plcFinancials
EIGEI Group plcConsumer Discretionary
ECMElectrocomponents plcIndustrials
ELMElementis plcMaterials
EDVEndeavour MiningMaterials
ENOGEnergean EnergyEnergy
ETOEntertainment One LtdCommunications
EQNEquiniti Group plcIndustrials
ESNTEssentra PlcIndustrials
ERMEuromoney Institutional Investors plcIndustrials
FCITF&C Investment Trust plcFinancials
FDMFDM Group plcTechnology
FXPOFerrexpo plcMaterials
FCSSFidelity China Special Situations PLCFinancials
FEVFidelity European Values plcFinancials
FSVFidelity Special ValuesFinancials
FINFinablr plcIndustrials
FGTFinsbury Growth & Income Trust plcFinancials
FGPFirstGroup plcConsumer Discretionary
FSFLForesight Solar Fund LtdFinancials
FUTRFuture plcCommunications
GFSG4S PlcIndustrials
GFRDGalliford Try PlcIndustrials
GAWGames Workshop GroupConsumer Discretionary
GCPGCP Infrastructure Investments LtdFinancials
DIGSGCP Student Living plcReal Estate
GSSGenesis Emerging Markets Fund LtdFinancials
GNSGenus plcHealthcare
GOGGo Ahead GroupConsumer Discretionary
GFTUGrafton GroupConsumer Discretionary
GRIGrainger PlcReal Estate
GPORGreat Portland EstatesReal Estate
UKWGreencoat UK Wind plcFinancials
GNCGreencore Group plcConsumer Staples
GRGGreggs PlcConsumer Discretionary
GVCGVC Holdings plcConsumer Discretionary
HMSOHammersonReal Estate
HVPEHarbourvest Global Private EquityFinancials
HSTGHastings Group Holdings plcFinancials
HASHays plcIndustrials
HSLHenderson Smaller Cos Investment Trust plcFinancials
HRIHerald Investment TrustFinancials
HGTHG Capital Trust plcFinancials
HICLHICL Infrastructure plcFinancials
HILSHill & Smith Holdings plc.Materials
HFGHilton Food Group PlcConsumer Staples
HOCHochschild Mining PlcMaterials
HSVHomeserve plcConsumer Discretionary
HWDNHowden Joinery Group PlcMaterials
HTGHunting plcIndustrials
IBSTIbstock plcMaterials
ICGTICG Enterprise Trust plcFinancials
IGGIG Group Holdings PlcFinancials
IMIIMI plcIndustrials
INCHInchcape plcConsumer Discretionary
ISATInmarsat PlcCommunications
IHPIntegrafin Holdings PlcFinancials
ICPIntermediate Capital Group plcFinancials
INPPInternational Public Partnerships LimitedFinancials
INVPInvestec PlcFinancials
IPOIP Group PlcFinancials
IWGIWG plcIndustrials
JDWJ D Wetherspoon plcConsumer Discretionary
FSJJames Fisher & Sons plcIndustrials
JLGJohn Laing Group plcIndustrials
JAMJPMorgan American Investment Trust plcFinancials
JMGJPMorgan Emerging Markets IT plcFinancials
JIIJPMorgan Indian Investment TrustFinancials
JFJJPMorgan Japanese Investment TrustFinancials
JEOJupiter European Opportunities TrustFinancials
JUPJupiter Fund Management PLCFinancials
JE.Just Eat plcTechnology
KNOSKainos Group plcTechnology
KAZKAZ Minerals plcMaterials
LRELancashire HoldingsFinancials
LWDBLaw Debenture CorporationFinancials
LMPLondonMetric Property plcReal Estate
EMGMan Group plcFinancials
MKSMarks & Spencer Group plcConsumer Discretionary
MSLHMarshalls PlcMaterials
MARSMarstons plcConsumer Discretionary
MCSMcCarthy & Stone plcReal Estate
MDCMediclinic International plcHealthcare
MRCMercantile Investment Trust PlcFinancials
MCROMicro Focus International plcTechnology
MABMitchells & Butlers PlcConsumer Discretionary
MNKSMonks Investment TrustFinancials
MGAMMorgan Advanced Materials plcIndustrials
MYIMurray International Trust plcFinancials
NEXNational ExpressConsumer Discretionary
NBLSNB Global Floating Rate Income Fund LtdFinancials
NETWNetwork International HoldingsIndustrials
NRRNewRiver REIT plcReal Estate
NESFNextEnergy Solar Fund LtdFinancials
OSBOneSavings Bank plcFinancials
OXIGOxford Instruments plcIndustrials
PAGEPageGroup plcIndustrials
PINPantheon InternationalFinancials
PAGParagon Banking Group plcFinancials
PAYPaypoint PlcIndustrials
PNNPennon GroupIndustrials
PLIPerpetual Income & Growth Inv TstFinancials
PNLPersonal Assets Trust plcFinancials
PETSPets At Home Group PLCConsumer Discretionary
PTECPlaytech plcTechnology
PLUSPlus500 LtdFinancials
PCTPolar Capital Technology Trust plcFinancials
PLPPolypipe Group plcReal Estate
PPHPPHE Hotel Group LtdConsumer Discretionary
PMOPremier Oil PlcEnergy
PHPPrimary Health Properties plcReal Estate
PFGProvident Financial plcFinancials
PRTCPuretech Health plcHealthcare
PZCPZ Cussons PlcConsumer Discretionary
QQ.QinetiQ Group plcIndustrial
QLTQuilter PlcFinancials
RNKRank GroupConsumer Discretionary
RATRathbone Brothers plcFinancials
RDWRedrow plcReal Estate
RSWRenishaw plcIndustrials
RTNRestaurant GroupConsumer Discretionary
RHIMRHI Magnesita N.V.Materials
RCPRIT Capital Partners plcFinancials
RSERiverstone Energy LtdFinancials
RORRotork plcIndustrials
RMGRoyal Mail PLCIndustrials
SBRESabre Financials Group PlcFinancials
SAFESafestore HoldingsReal Estate
SNNSanne Group plcFinancials
SVSSavills plcReal Estate
SDPSchroder Asia Pacific FundFinancials
SOISchroder Oriental Income FundFinancials
SCINScottish Investment Trust plcFinancials
SNRSenior plcIndustrial
SEQISequoia Economic Infrastructure Income Fund LtdFinancials
SRPSerco Group plcIndustrials
SHBShaftesburyReal Estate
SHISig plcReal Estate
SRESirius Real Estate LimitedReal Estate
SSONSmithson Investment Trust PlcFinancials
SCTSoftcat plcTechnology
SOPHSophos Group plcTechnology
SXSSpectris plcIndustrials
SPTSpirent Communications plcCommunications
SPDSports Direct Intl PlcConsumer Discretionary
SSPGSSP Group plcConsumer Discretionary
SMPSt Modwen Properties plcReal Estate
SGCStagecoach Group plcConsumer Discretionary
SYNCSyncona LimitedFinancials
SYNTSynthomer plcMaterials
TALKTalktalk Telecom Group PlcCommunications
TATETate & Lyle plcConsumer Staples
TBCGTBC Bank Group PlcFinancials
TEPTelecom Plus plcUtilities
TMPLTemple Bar Investment Trust plcFinancials
TEMTempleton Emerging Markets Inv Tst plcFinancials
TRIGThe Renewables Infrastructure Group LimitedFinancials
TIFSTI Fluid Systems plcIndustrials
TCAPTP ICAP plcFinancials
TRYTR Property Investment Trust plcFinancials
TRNTrainline plcConsumer Discretionary
TPKTravis Perkins plcConsumer Discretionary
BBOXTritax Big Box REIT plcReal Estate
TLWTullow Oil plcEnergy
UDGUDG Healthcare plcHealthcare
UKCMUK Commercial Property Reit LimitedReal Estate
ULEUltra Electronics HoldingsIndustrial
UTGUnite GroupReal Estate
VSVSVesuvius plcIndustrials
VEILVietnam Enterprise Investments LtdFinancials
VOFVinaCapital Vietnam Opportunity Fund LtdFinancials
VMUKVirgin Money UK plcFinancials
VVOVivo Energy PlcEnergy
WOSGWatches Of Switzerland Group plcConsumer Discretionary
WEIRWeir Group plcIndustrials
SMWHWH Smith PlcConsumer Discretionary
WMHWilliam Hill plcConsumer Discretionary
WTANWitan Investment Trust plcFinancials
WIZZWizz Air Holdings plcConsumer Discretionary
WG.Wood Group (John) PlcIndustrials
WKPWorkspace Group PlcReal Estate
WWHWorldwide Healthcare Trust plcFinancials

Is FTSE 250 a good investment?

The concentrated allocation towards the financials sector paired with relatively small businesses makes the FTSE 250 index a volatile trading ground. But this volatility comes alongside the potential for higher returns. And for risk-seeking growth investors, investing in the stock market index could be a suitable investment strategy.

However, for more conservative investors with little stomach for rapid price fluctuations, buying shares of an FTSE 250 index fund is likely an unsuitable decision. In the end, whether the FTSE 250 is, a good investment ultimately depends on the individual investor and their investment goals, risk tolerance, and time horizon.

The bottom line

The FTSE 250 is one of the most widely followed indices in the United Kingdom by long-term investors and short-term traders. It provides portfolio exposure to smaller businesses which can be a tremendous source of growth for those willing to take on additional risk.

Discover market-beating stock ideas today. Join our Premium investing service to get instant access to analyst opinions, in-depth research, our Moonshot Opportunities, and more. Learn More

This article contains general educational information only. It does not take into account the personal financial situation of the reader. Tax treatment is dependent on individual circumstances that may change in the future, and this article does not constitute any form of tax advice. Before committing to any investment decision, an investor must consider their individual financial circumstances and reach out to an independent financial advisor if necessary.

Written By

Prosper Ambaka, Esq.

Prosper is a self-taught financial analyst and investor with years of experience. Inspired by Benjamin Graham, he employs a value-investing school of thought throughout his analyses. This has led to Prosper developing a wealth of knowledge in equities, foreign exchange, commodities, and global macroeconomic issues.

In 2019, he completed his Law degree and was called to the Nigerian Bar in 2021. Outside The Money Cog, Prosper encourages others to join the investment community through his lectures on financial literacy as well as investing strategies.

Current Holdings


Edited & Fact Checked By
Zaven Boyrazian MSc

Zaven has worked in several industries throughout his career, from aircraft factories to game development studios. He has been actively investing in the stock market for the better part of a decade, managing over $1 million across multiple portfolios.

Specializing in corporate valuation, Zaven employs a modern take on the principles set out by Benjamin Graham to find new opportunities at fair prices.

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