Indices exist for every sort of market from bonds to more esoteric assets but the major of investors are probably most familiar with stockmarket indices. Indices simply reflect the overall value of the specific group of stocks within the index. They are re-calculated on a regular basis throughout the day.
In the UK, the most popular (or "benchmark" index) is the Financial Times Stock Exchange 100 Share Index (known as the FTSE 100 or the Footsie for more on that, see here).
In the US, the nearest equivalent benchmark index is the Dow Jones Industrial Average, which is calculated by the Dow Jones Company, the publisher of The Wall Street Journal. It focuses on the stocks of the 30 largest and most influential companies in the US. The S&P 500 a more comprehensive US index looks at a much bigger selection of companies.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Germany's benchmark stockmarket index is the Dax 30, and in Japan investors look towards the Topix and Nikkei 225 indices. A popular global stock index, meanwhile, is the MSCI World Index.
Index tracker funds and exchange-traded funds (ETFs) are designed to track an underlying index in order to provide investors with exposure to a given market.
See Tim Bennett's video tutorial: What is an index?
-
8 of the best houses for sale for around £500,000Some of the best houses for sale for around £500,000 – from a 19th-century stone farm cottage in North Yorkshire and a two-bedroom apartment in Edinburgh’s New Town to a converted Methodist chapel in Norfolk
-
What will the unravelling of US-China trade mean for the economy?What will a US-China decoupling mean for the global economy?
-
Low-cost index funds for simple investingTips Index funds are an easy, low-cost way for investors to invest in a sector or asset class. Here’s a selection of the cheapest passive tracker funds on the market right now
-
Britain’s resilient blue chips – a refuge in the inflationary stormNews The UK's blue-chip FTSE 100 index has been the best-performing major stockmarket index so far this year.
-
Why you need to invest at least some of your money outside the UKAdvice Most investors tend to have a bias to their home market. But that’s a mistake, says Rupert Hargreaves. Investing in international stocks can help diversify your portfolio and protect your wealth from unnecessary risks.
-
The FTSE 100 is doing moderately well – can this continue?Analysis The FTSE 100 performed well and better than expected in the first quarter of 2022. John Stepek looks at what has changed.
-
Index providerGlossary Stockmarket indices such as the FTSE 100 play a huge role in investment. But where do they come from and who maintains them?
-
The spectre of stagflation shakes stockmarketsNews Stockmarkets are getting increasingly jumpy about stagflation, the combination of economic stagnation and high inflation, with America’s S&P 500 down by 4.8% in September and the FTSE 100 by 1%.
-
Too embarrassed to ask: what is an index?Videos The FTSE 100 is probably the best-known stockmarket index in the UK. But what exactly is an index?
-
Bank on financial stocks with this investment trustTips Banks, though not British banks, look set for a strong rebound, making this investment trust worth researching.
