wealtheducation-what_are

What are Indices?

A Market Indices is a measurement of a section of a particular financial market. Many indices are cited by news or financial services firms and are used to benchmark the performance of portfolios such as unit trusts or mutual funds.

Stock market indices may be classed in many ways. A 'world' or 'global' stock market index includes (typically large) companies without regard for where they are domiciled or traded. Two examples are MSCI World and S&P Global 100.

A national index represents the performance of the stock market of a given nation—and by proxy, reflects investor sentiment on the state of its economy. The most regularly quoted market indices are national indices composed of the stocks of large companies listed on a nation's largest stock exchanges, such as the British FTSE 100 , the French CAC 40, the German Xetra DAX , the Japanese Nikkei 225, the American DJIA or Dow_Jones_Industrial_Average and S&P 500, the Singapore Straits Times index, the Indian Sensex, the Australian All Ordinaries and the Hong Kong Hang Seng Index.

The concept may be extended well beyond an exchange. The Dow Jones Total Stock Market Index, as its name implies, represents the stocks of nearly every publicly traded company in the United States , including all U.S. stocks traded on the New York Stock Exchange (but not ADRs) and most traded on the NASDAQ and American Stock Exchange. Russell Investment Group added to the family of indices by launching the Russell Global Index.

What is an Index?