Scottish Mortgage, Rentokil Initial join FTSE 100 as Dixons Carphone, Capita drop out

Scottish Mortgage Investment Trust and Rentokil Initial have been promoted to the FTSE 100 index as part of a quarterly reshuffle, with Dixons Carphone and Capita dropping out after falls in their share price in recent months.

Joining that demoted pair in the FTSE 250, were Syncona, Sanne Group and Northgate, which were promoted from the small cap list as N Brown, International Personal Finance and CMC Markets were relegated.

FTSE Russell confirmed the quarterly changes to its UK indices after the market closed on Wednesday, based on market capitalisations at the close on the previous day.

All constituent changes will be applied after the close of business on Friday 17 March and will be effective on Monday 20 March.

Dixons Carphone leaves the top flight after a 19-year run for Dixons since its entry in 1995.

Capita entered the blue chip benchmark in 2000 but passed a spell in the FTSE 250 from 2003 to 2004.

EasyJet and Intu Properties were close to the FTSE relegation zone but escaped the drop.

Scottish Mortgage is only the third investment trust to ascend to the UK’s corporate elite and the fourth to feature in total, said Russ Mould, investment director at AJ Bell.

“Its promotion to the FTSE 100 reflects excellent portfolio performance, helped by a focus on long-term growth stories in its quest for capital gains for investors."

Scottish Mortgage has barely 4% of its assets in the UK and key holdings include Amazon, Tesla, Ferrari and Chinese social media and internet sensations Alibaba and Baidu, which means, Mould said, that Brexit worries "are not an issue for investors here and sterling’s weakness has increased the value of these overseas holdings".

Rentokil rejoined the FTSE 100 after being demoted in 2009 after a three-month stay, having been a constituent in 2007-2008 and before that from 1991 to 2006.

Since it was last in the blue chip index, Rentokil Initial, once best known in the UK as the royal ratcatcher, has built a substantial overseas presence, including a new Indian joint venture earlier this week, and while there is still a focus on pest control and hygiene it made 41 acquisitions in 2016.

Mould said Rentokil has demonstrated consistent earnings growth and has just announced its sixth straight annual dividend increase.

Of the new FTSE 350 additions, Sanne is a provider of outsourced corporate and fund administration, reporting and fiduciary services, making the jump after tripling in size to near-£600m since floating in 2015, with two sizeable acquisitions in the US and Asia-Pacific in the past six months.

Syncona is a healthcare investor focused on cancer treatments. It changed its name from BACIT Limited in December after raising a gross £357.1m through a placing and open offer, buying a portfolio of life science investments from the Wellcome Trust and a majority share in Cancer Research's CRT Pioneer Fund, with plans to invest its new funds in "premium life science opportunities". The investment company is 37%-owned by the Wellcome Trust and Cancer Research UK owns 3.2%.

Vehicle hire company Northgate is rejoining the FTSE 250, having been a long-time constituent before being badly hit by the financial crisis, when the highly cyclical business had grown its fleet to 68,600 vehicles in the UK and 62,750 in Spain.