Index

RECENT NEWS
The Hindu Business Line  Apr 23  Comment 
After a rally, both the Nifty and the Sensex are poised at a vital resistance zone
Yahoo  Apr 22  Comment 
A rebound in the price of oil and natural gas helped drive sharp gains for energy and financial companies, nudging U.S. stocks mostly higher Friday. That offset a slide in the technology sector following ...
MarketWatch  Apr 21  Comment 
Wobbly open puts U.S. stock indexes' three-day win streak at risk
The Times of India  Apr 21  Comment 
Mumbai, April 21 (IANS) Key Indian benchmark indices were trading higher during afternoon session on Thursday following Asian markets cues.
The Hindu Business Line  Apr 16  Comment 
The Nifty and Sensex resume their uptrend on forecast of better-than-normal rains
The Economic Times  Apr 16  Comment 
The short trading week of three days saw key Indian equity indices shoot up over 3.75%, mainly on news that monsoon this year is expected to be above normal.
The Economic Times  Apr 14  Comment 
Results from JPMorgan, the No. 1 US bank by assets, had helped boost the market on Wednesday a day after energy shares led Wall Street higher.
Reuters  Apr 14  Comment 
Wall Street was little changed on Thursday after two days of solid gains as investors digested the latest round of big bank earnings and financial shares kept bouncing back.




 
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An index, when used with respect to financial markets, is a statistical measure of change in a securities market. Indexes, or indices (both are correct in American English), are imaginary portfolios of securities (usually stocks) representing a particular market or a portion of it.

This is the chart for the Dow Jones Industrial Average. Scroll down for a list of major world indices on Wikinvest.



Generally, an index has three main purposes:

  • An Index shows the performance of a basket of equities instead of just a single equity - IE an index is diversified.
  • An index can show the performance of a particular class of assets - for example, a biotechnology index would show the performance of a diverse group of biotech companies over time.
  • An index can also be used to provide a generic securities category for passive management and derivatives (passive investing).

Each index is calculated using its own methodology, and its value is expressed in terms of a change from an original base value. So the numerical value of an index is not as significant as the percent change in the index.

Investing in indexes is a way to invest in the performance of a broad market sector, or in the market as a whole. But to trade an index, an investor must buy or sell through a third party. Stock and bond market indexes are used to make mutual funds and exchange-traded funds (ETFs) that mirror the performance of the index. Regardless of security type, indexing can cover broad categories such as a Total Market Index like (VTI), index investing can also be more micro and track sectors such as Small Cap Brazilian Companies (BRF).

When investing in an Exchange Traded Funds that tracks an index, an investor buys or sells an entire group of stocks when trading that particular ETF - an example is the StreetTRACKS Dow Jones Global Titans Index Fund (DGT). Some indexes allow investors to put money into commodities - an example is the PowerShares DB Commodity Index Tracking Fund (DBC) - while others, like the Baltic Dry Index (BDI), are important economic indicators used to measure the rates under which services are sold in a particular industry (in the case of the BDI, dry bulk shipping). Still others are forward looking, measuring the anticipated volatility of the markets - an example is the Nasdaq Volatility Index (VXN).

Major World Index on Wikinvest

There are many products available to investors to give them exposure to international indices. Mutual Funds and ETFs are the most widely held instruments which investors use to track markets around the world. Some examples of Major World Indices would be MSCI Emerging Market Index (EEM), MSCI EFAE Index (EFA), or Vanguard Emerging Markets (VWO). These are just a few examples of common securities offered to investors seeking exposure to an international world market index.

It is important to consider the currency risks of investing in many international index funds as well as the potentially higher costs associated with the transactions needed to operate the fund (trading, taxes, etc).


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