Glossary

Indices

There are indices for every sort of market, but retail investors are probably most familiar with those related to stock markets.

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).

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

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.

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.

Advertisement
Advertisement - Article continues below

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?

Advertisement

Most Popular

Visit/economy/inflation/600799/federal-reserve-inflation-money-printing
Inflation

Here’s why the Federal Reserve might print more money before 2020 is out

The Federal Reserve wants to allow US inflation to run “hot” for a while. But that’s just an excuse to keep interest rates low – and possibly print mo…
10 Feb 2020
Visit/investments/property/house-prices/600795/uk-house-price-rise-brexit-bounce
House prices

Is the jump in house prices just a Brexit bounce, or is it more durable?

UK house prices rose sharply in January. Some of that is down to the end of Brexit uncertainty – but not all. There is a real risk that prices will ke…
7 Feb 2020
Visit/economy/uk-economy/brexit/600778/winners-and-losers-from-a-hard-brexit
Brexit

Winners and losers from a hard Brexit

Our exit from the EU is likely to be of the hard variety, says Matthew Lynn. Investors should back the industries that will flourish
9 Feb 2020
Visit/investments/commodities/600729/the-rare-earth-metal-that-wont-be-a-secret-for-long
Sponsored

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020