The FT 30 Index, historically called the Financial Times Industrial Ordinary Share Index or FT Ordinary Index, is a narrow UK share-price index launched in 1935 with 30 industrial and commercial stocks. Its defining feature is an equally weighted geometric-average calculation. It is not a market-capitalization-weighted index and should not be confused with the modern FTSE 100.
Key Takeaways
- The FT 30 began on July 1, 1935, with a base value of 100.
- Its 30-share sample was originally selected to provide a timely indicator of leading UK industrial and commercial share prices.
- It uses a geometric average, not the capitalization-weighted formula previously shown on this page.
- Equal treatment of constituent price relatives means company size and portfolio capital weights are not represented in the modern free-float sense.
- Geometric averaging creates a downward drift relative to an arithmetic average when constituent returns differ.
- FT 30 is most useful for historical context and index-methodology study, not as a broad measure of today’s UK equity market.
- Historical series require careful treatment of constituent changes, corporate actions, dividends, frequency, and methodology.
Why the FT 30 Was Created
Before electronic real-time broad-market indexes, market users needed a compact, frequently calculated indicator of London share-price movement. The Financial Times selected 30 leading industrial and commercial shares and launched the series in 1935.
LSEG’s history of the FTSE 100 explains that the FT 30 was calculated hourly with a delay by the early 1980s. Computerized trading, portfolio analysis, and equity derivatives created demand for a broader, continuously calculated benchmark. The FTSE 100 was launched in 1984 to meet that changed market need.
This does not make the FT 30 meaningless. It makes its purpose different: the series is a useful historical indicator and a clear example of how index construction can shape measured return.
For (N) constituents, the change in a geometric index can be represented with price relatives:
$$
\frac{I_t}{I_0}
=
\left(
\prod_{i=1}^{N}
\frac{P_{i,t}}{P_{i,0}}
\right)^{1/N}
$$
where:
- (I_t) is the index level at time (t);
- (P_{i,t}/P_{i,0}) is constituent (i)’s adjusted price relative; and
- (N=30) for the FT 30.
The conceptual formula omits maintenance details needed to handle substitutions, stock splits, rights issues, and other corporate actions. It also describes price movement rather than a dividend-reinvesting portfolio return.
Worked Example: Geometric Drag
Assume a three-stock demonstration index starts with each price relative at 1.00. At the end of the period, the relatives are:
- Stock A:
1.10, a 10% gain; - Stock B:
1.00, no change; and - Stock C:
0.90, a 10% loss.
The arithmetic mean of the returns is zero:
$$
\frac{10\%+0\%-10\%}{3}=0\%
$$
The geometric price-relative result is:
$$
\left(1.10\times1.00\times0.90\right)^{1/3}-1
=
0.99^{1/3}-1
\approx -0.335\%
$$
The equal positive and negative percentage moves do not cancel geometrically because recovering from a percentage loss requires a larger percentage gain. For example, a 10% fall from 100 to 90 needs an 11.11% gain to return to 100.
This effect compounds when constituent returns disperse. A 1971 actuarial study found that the arithmetic reconstruction of the FT index increasingly exceeded the geometric series over long periods. The study cautioned against interpreting long-run FT 30 changes as the return of an equally invested portfolio.
FT 30 vs. FTSE 100
| Feature | FT 30 | FTSE 100 |
|---|
| Launch | 1935 | 1984 |
| Number of companies | 30 | 100 |
| Original role | Timely indicator of selected industrial and commercial shares | Rules-based large-cap UK benchmark suitable for real-time market use |
| Calculation concept | Equal treatment in a geometric average of price relatives | Float-adjusted capitalization weighting with a divisor |
| Company-size effect | Not weighted by company market value | Larger float-adjusted market values generally receive more weight |
| Market coverage | Narrow historical sample | Broader eligible large-cap segment |
| Best use | Historical and methodology analysis | Current large-cap benchmarking, products, and market reporting |
The FT 30 is also narrower than the FTSE All-Share, which aggregates large-, mid-, and small-cap UK segments.
Why Geometric and Arithmetic Indexes Differ
The arithmetic average of constituent returns can represent an equal-capital starting portfolio over one period, subject to rebalancing and cash-flow assumptions. A geometric average measures the multiplicative center of price relatives. These are different objects.
For positive price relatives, the arithmetic mean is at least as large as the geometric mean:
$$
\frac{1}{N}\sum_{i=1}^{N}x_i
\ge
\left(\prod_{i=1}^{N}x_i\right)^{1/N}
$$
Equality holds only when all (x_i) are the same. Greater dispersion therefore increases the difference. That mathematical property explains why a geometric index can understate the long-run result of an arithmetic equal-capital portfolio comparison.
What the FT 30 Can and Cannot Show
The FT 30 can help with:
- studying historic UK market conditions;
- comparing old newspaper or policy commentary with period-appropriate data;
- demonstrating geometric index construction;
- analyzing how narrow samples and calculation rules affect a market indicator; and
- understanding the development of modern UK equity benchmarks.
It cannot, without substantial qualification:
- measure the whole UK equity market;
- represent a capitalization-weighted investable portfolio;
- include ordinary dividend income in a price-only comparison;
- describe financial, small-cap, or other excluded market segments; or
- substitute for a current FTSE UK factsheet and methodology.
Risks and Limitations
- Narrow sample: 30 shares can miss broad changes outside the selected companies and industries.
- Selection judgment: the historical sample was chosen to represent industrial and commercial activity rather than generated solely by current transparent size rules.
- Geometric drag: return dispersion lowers the geometric average relative to the arithmetic average.
- No market-cap representation: equal treatment of price relatives does not reflect each company’s economic size or investable float.
- Price-return focus: dividends and investor cash flows require a separate return calculation.
- Historical discontinuity: substitutions and corporate actions complicate long-period comparisons.
- Frequency and timing: historical hourly or closing observations are not directly comparable with modern real-time series.
- Survivorship risk: analyzing only current or surviving names would misstate the historical index.
How to Use Historical FT 30 Data
- Confirm the exact series name, source, base, date, and observation time.
- Verify whether the data are price-only and whether corporate actions were adjusted.
- Use the constituents that applied on each historical date.
- Do not infer portfolio value from a geometric index without reconstructing the portfolio rules.
- Keep FT 30 results separate from FTSE 100 and FTSE All-Share results.
- Explain exclusions and the narrow 30-stock sample.
- Document any splice, rebasing, inflation adjustment, or currency conversion.
Common Mistakes
- Expanding FT 30 into a modern FTSE index name.
- Calculating it with market capitalization and a conventional free-float divisor.
- Calling it equivalent to the FTSE 100 or Dow Jones Industrial Average.
- Treating a geometric-average change as an equal-capital portfolio return.
- Assuming industrial in the historical name has today’s industry-classification meaning.
- Adding dividend yield to a price-index return without matching dates and methodology.
- Using current constituents to explain historical movements.
Authoritative Sources
- FTSE: The current provider brand and broad index-family concept.
- FTSE 100: The modern UK large-cap index launched in 1984.
- FTSE All-Share: A broad current UK equity benchmark.
- Price-Weighted Index: A different method in which constituent share prices determine influence through an arithmetic construction.
- Capitalization-weighted Index: The modern weighting family based on adjusted company market value.
- Index: A rules-based statistic representing a defined market or portfolio segment.
FAQs
Is the FT 30 market-cap weighted?
No. The FT 30 uses equal treatment of 30 constituent price relatives in a geometric-average calculation. It does not assign weights according to full or free-float market capitalization.
Why can the FT 30 understate an equal-weighted portfolio return?
The geometric mean is lower than the arithmetic mean when constituent price relatives differ. Over long periods, that mathematical drag can make the index diverge from a portfolio that began with equal capital in each constituent.
Is the FT 30 the same as the FTSE 100?
No. FT 30 began in 1935 with 30 selected stocks and a geometric calculation. FTSE 100 began in 1984 as a rules-based, real-time large-cap index using float-adjusted capitalization weighting.
This article is educational historical material, not investment advice or a recommendation to use a particular benchmark.