What Is Market Index? Meaning & Example
Definition
A market index tracks the performance of a selected group of securities to represent part of the market. Indexes are used as benchmarks and as the basis for index funds.
Related terms
An index fund aims to match the performance of a market index by holding the same securities. It is typically low cost and widely used for passive investing.
BenchmarkA benchmark is a standard, often a market index, used to measure an investment's performance. Comparing with a suitable benchmark shows whether a strategy added value.
ETF (Exchange-Traded Fund)An ETF is a fund that holds a basket of assets and trades on an exchange like a stock. Many ETFs track an index and offer low-cost diversification.
What is Market Index?
A market index tracks the performance of a selected group of securities to represent part of the market. Indexes are used as benchmarks and as the basis for index funds.
Can you give an example of Market Index?
A broad index of 500 large companies is often used to describe how the overall stock market performed.