The UK stock market - 7 simple questions answered

If you’ve ever looked into investing in the UK, you’ve probably come across terms like the London Stock Exchange, FTSE 100 or AIM - and wondered how they all fit together.

Knowing what these terms mean can help you feel more confident about making the right decisions for you. So, we’ve pulled together this quick Q&A to bring you up to speed.

Feel free to scroll and read at your leisure - or use the links to jump to the questions that interest you the most.

1. What is the London Stock Exchange?

2. What is the Main Market?

3. What is AIM?

4. What are FTSE indices?

5. What is the FTSE 100?

6. What is the FTSE 250?

7. What is the FTSE All-Share?

1. What is the London Stock Exchange?

The London Stock Exchange (LSE) is where shares in many UK-listed companies are bought and sold. When people talk about the UK stock market, they’re often referring to companies listed there.

But it’s not just one single list. The LSE includes different parts of the market - and those parts can include very different types of businesses.

2. What is the Main Market?

The Main Market is the London Stock Exchange’s primary market for listed companies. It includes many larger, more established businesses.

Companies listed here must meet stricter rules on reporting and transparency. That doesn’t make them risk-free - share prices can still rise and fall - but they are generally more established than companies on smaller markets.

3. What is AIM?

AIM (the Alternative Investment Market) is also part of the London Stock Exchange, but it focuses on smaller, growing companies.

These businesses may offer higher growth potential, but they can also be more risky. Share prices may be more volatile, and it can sometimes be harder to buy or sell shares quickly.

For that reason, many beginners start with a diversified fund rather than investing in individual smaller companies.

4. What are FTSE indices?

This is where things can get a little more involved.

The London Stock Exchange is the place where shares are traded. A FTSE index is a way of grouping companies together to track how part of the market is performing. If you’re wondering, FTSE (pronounced ’Footsie’) stands for Financial Times Stock Exchange.

In simple terms:

• the stock exchange is the marketplace
• an index is a measure of a group of companies

Indices are widely used by investors and fund managers to track performance. There are many FTSE indices covering different parts of the market, but the FTSE 100, FTSE 250 and FTSE All-Share are among the most widely followed, so we’ve highlighted these below.

5. What is the FTSE 100?

The FTSE 100 includes 100 of the largest qualifying companies listed on the London Stock Exchange. It’s the best-known UK share index.

Because it focuses on large companies, it’s often seen as representing the ‘big business’ end of the market. But many of these companies operate globally, so just because a company is listed on the FTSE 100, it doesn't necessarily reflect the UK economy.

• Bookmark our page on the FTSE 100 

6. What is the FTSE 250?

The FTSE 250 includes the next 250 largest qualifying companies after the FTSE 100.

These are typically medium-sized businesses. They can offer a different perspective on the UK market, as they tend to be more focused on domestic activity than the global giants in the FTSE 100.

• Bookmark our page on the FTSE 250

7. What is the FTSE All-Share?

The FTSE All-Share provides a broader view of the UK stock market. It combines the FTSE 100, FTSE 250 and a further group of smaller companies.

It’s designed to represent around 98% of the market value of eligible UK-listed companies (excluding AIM).

That makes it a useful snapshot of the overall UK listed market.

• Bookmark our page on the FTSE All-Share

Thinking about investing in the UK?

If you’re considering adding UK shares to your portfolio, this regularly updated guide explores the case for investing in the UK market and highlights a range of funds to suit different goals.

• Read: Investing in the UK stock market: 5 British ISA fund ideas

Important information: - investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). Select 50 is not a personal recommendation to buy funds. Equally, if a fund you own is not on the Select 50, we're not recommending you sell it. You must ensure that any fund you choose to invest in is suitable for your own personal circumstances. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.