Energy dominates FTSE in rebalance

Oil and gas remains the dominant sector among Britain’s 100 largest companies after the latest changes to the FTSE 100.

At its quarterly rebalancing this month, an oil company, two miners and an investment trust were among those moving back into the index.

The F&C Investment Trust (FCIT); Fresnillo, a silver miner; Lonmin, a platinum miner; Intertek Group, a solutions pro­vider; and Petrofac, an oil and gas firm, are the new additions. Both Lonmin and Fresnillo were removed from the FTSE at the last review in December.

Relegated stocks are 3i, a private equity firm; FirstGroup, a transport operator; the London Stock Exchange; Tate & Lyle, a food producer; and Wolseley, a building materials group. Tate & Lyle had been brought back into the index at the December review. The changes are effective from next week.

Oil and gas companies make up 24.5% of the rebalanced index. Banks, financial services firms and insurers are seeing their share of the index drop, according to FTSE Group. FCIT joins the £2 billion Alliance Trust as the only two investment trusts in the index.

Jeremy Tigue, the manager of the £1.8 billion F&C vehicle, says its re-entry into the index results from the share price declines of other investment trusts rather than a large increase in its own assets.

Historically, FCIT’s inclusion is a bullish signal for markets, Tigue adds. In 2003, FCIT re-listed after a long bear market that bottomed and upturned not long afterwards, he says.

However, the main difference in this market is that FCIT has stricter controls to prevent its discount to net asset value widening too much. FCIT’s average discount in 2008 was 5.8%, against an industry average of 14.8%, according to the group.

Stocks that have slipped down from the FTSE 250 to the FTSE Small-Cap this month include Candover Investments, Cattles, a financial services firm, and Yell Group, a directories business.

Those moving up from the small-cap to the mid-cap index include BlueBay Asset Management, Edinburgh UK Tracker Trust and Polar Capital Technology Trust.