FTSE 100 loses 4 big names in reshuffle

Four big names have been relegated from the FTSE 100 index after its quarterly reshuffle.

Alliance & Leicester and housebuilder Persimmon are out as a result of the credit crunch while Argos and Homebase-owner Home Retail Group and sugar company Tate & Lyle are also down.

They have been replaced by technology group Invensys, mining company Ferrexpo, resource services group Petrofac and finally, power station Drax.

Justin Urquhart Stewart of Seven Investment Management said the FTSE 100 is biased to resources and commodities and as a result of this, there is a great risk being run because of this weighting towards the sector.

According to Henk Potts of Barclays Stockbrokers, the FTSE 100 used to be an indicator of UK plc – monopolised by well-known British names. However, it is now a mix of international businesses, with names people haven’t heard of and this is a good thing, successful international firms are being attracted to the index.

DigitalLook, the information group, says that the dominance of the FTSE 100 by commodity related companies has important implications for those passive investors who have large weightings in FTSE 100 tracker funds.

Private investors need to examine just how comfortable they are with tying the fortunes of their portfolio to the movement in commodity prices, explained Andy Yates, of DigitalLook.

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