ETF guide · Updated October 2026
FTSE 100 ETFs Explained: How to Own the UK's Top 100 Companies
A FTSE 100 ETF lets you own the UK's biggest companies in one low-cost fund. This guide explains how the index works, which ETFs are cheapest, what they pay in dividends, and where they fit in a portfolio.
- Companies
- 100 largest on the LSE
- Cheapest ETF
- 0.07% ISF and CUKX
- 2026 yield
- 3.3% forecast, AJ Bell
- Record dividends
- £90.3bn 2026 forecast
Quick answer
A low-cost way to own the UK's largest companies
A FTSE 100 ETF gives you all 100 of the UK's biggest listed companies in a single, cheap purchase. The cheapest options charge 0.07% to 0.09% a year. Moreover, the index pays one of the highest dividend yields among major markets. However, it is concentrated in a few sectors, so most investors treat it as one part of a wider portfolio.
The basics
What the FTSE 100 is
The FTSE 100 is an index of the 100 largest companies on the London Stock Exchange by market value. It includes names such as AstraZeneca, Shell, HSBC, Unilever and BP. Because it weights companies by size, the largest firms move the index most.
The index reached an all-time closing high of 10,911 in February 2026. Even so, it has historically grown more slowly than the US market, because it holds few fast-growing technology companies.
Live chart from TradingView. Past performance is not a reliable guide to future returns.
Why investors buy it
Why UK investors choose a FTSE 100 ETF
- Dividends: AJ Bell expects a record £90.3 billion of FTSE 100 dividends in 2026, a forecast yield of 3.3%.
- Buybacks: companies have announced a further £46.7 billion of share buybacks this year.
- Low cost: the cheapest FTSE 100 ETFs charge just 0.07% a year.
- No currency fee: they trade in pounds, so you avoid FX costs on purchase.
- Global earnings: most revenue comes from abroad, so it is less tied to the UK economy than it seems.
Meanwhile, 10-year gilt yields have risen above 5.4%, close to their highest since 2007. As a result, some income investors now compare share dividends with what bonds pay.
Compare ETFs
The main FTSE 100 ETFs compared
| ETF | Provider | Charge | Dividends |
|---|---|---|---|
| ISF | iShares | 0.07% | Paid out (distributing) |
| CUKX | iShares | 0.07% | Reinvested (accumulating) |
| VUKE | Vanguard | 0.09% | Paid out (distributing) |
| VUKG | Vanguard | 0.09% | Reinvested (accumulating) |
Charges from issuer factsheets and Lightyear, October 2026.
In practice, the difference between 0.07% and 0.09% is £2 a year on £10,000. So your choice of income or accumulation matters more than the small gap in fees.
Step by step
How to buy a FTSE 100 ETF
- Choose a platform. Ideally, pick one with no fee on ETF trades, such as Trading 212 or Interactive Brokers.
- Open a stocks and shares ISA. This keeps your gains and dividends free of UK tax.
- Search for the ticker. For example, ISF, CUKX, VUKE or VUKG.
- Pick income or accumulation. Then decide how much to invest, as a lump sum or monthly.
- Hold for the long term. Also, review it once a year rather than reacting to daily moves.
Comparison
FTSE 100 vs FTSE 250 vs global funds
| Fund type | Holdings | Main strength | Main weakness |
|---|---|---|---|
| FTSE 100 | 100 large UK firms | High dividends | Few tech firms |
| FTSE 250 | 250 mid-sized UK firms | More UK-focused growth | More volatile |
| Global (VWRP) | About 3,800 firms worldwide | Wide diversification | About 3–4% in the UK |
For this reason, many UK investors hold a global fund as their core. Then they add a FTSE 100 ETF if they want more UK exposure or income. See our best ETFs guide for more options.
Risks
Risks of FTSE 100 ETFs
- Sector concentration: banks, energy, mining and consumer staples dominate the index.
- Few growth companies: it has little exposure to large technology firms.
- Dividend cuts: payouts fell sharply in 2020, and they can fall again in a downturn.
- Single country: UK political and economic events can still affect prices.
In short, a FTSE 100 ETF is cheap and simple. However, it works best as one part of a diversified portfolio.
FAQ
FTSE 100 ETFs: FAQs
Choosing an ETF
What is a FTSE 100 ETF?
It is a fund that tracks the FTSE 100 index of the 100 largest companies on the London Stock Exchange. So one purchase gives you a small stake in all of them.
What is the cheapest FTSE 100 ETF?
For example, the iShares Core FTSE 100 ETFs (ISF and CUKX) charge 0.07% a year, and Vanguard's VUKE and VUKG charge 0.09%. The gap is tiny, so tracking quality and the right share class matter just as much.
Should I choose ISF or CUKX?
Both track the same index. However, ISF pays dividends out to you, while CUKX reinvests them automatically. Choose ISF for income and CUKX for growth.
Can I hold a FTSE 100 ETF in an ISA?
Yes. FTSE 100 ETFs are ISA-eligible, and you can invest up to £20,000 a year in ISAs in 2026/27. Gains and dividends inside the ISA are free of UK tax.
Dividends, tax and risk
Do I pay stamp duty on FTSE 100 ETFs?
No. Buying ETF shares on the London Stock Exchange does not attract the 0.5% stamp duty that applies to most individual UK shares.
What dividend yield does the FTSE 100 pay?
According to AJ Bell, analysts forecast a 3.3% yield for 2026, with a record £90.3 billion of dividends. Forecasts can change, and dividends are never guaranteed.
Is the FTSE 100 the same as the UK economy?
No. Most FTSE 100 revenue comes from outside the UK. As a result, the index often rises when the pound falls, because overseas earnings are worth more in pounds.
Is a FTSE 100 ETF enough on its own?
Usually not. It holds 100 firms in one country, with heavy weights in banks, energy and consumer staples. Many investors therefore pair it with, or use instead, a global fund such as VWRP.
Keep reading
Related guides
Sources
Sources
- AJ Bell – Can record dividends help the FTSE 100 outrun gilt yields? (8 October 2026)
- iShares – Core FTSE 100 UCITS ETF
- Lightyear – CUKX vs VUKE
- FTSE Russell – UK indices
- GOV.UK – Individual Savings Accounts
This guide is general information, not personal financial advice. Some links may be affiliate links, which never affect our content. vwrp.co.uk is independent and not affiliated with Vanguard or any provider mentioned. Capital is at risk; past performance is not a reliable guide to future returns.