Whether you are looking for mutual fund index or ETFs or want to find out which index is used as a benchmark for your investments or portfolio, this list of major market stock indexes will be useful to you.
Keep in mind that indices are not an investment; they are simply a measure of performance for a particular group of securities on the stock exchange.
Index funds will invest in the same stock exchange as the main index.
The following are the most common indices (or indices) to invest today in stock markets:
Dow Jones Industrial Average
The Dow Jones Industrial Average is a stock index that represents the average price movement of 30 large companies from various industries in the United States.
Named after Charles Dow and Edward Jones; other names of the stock index are the Dow Jones, the Dow 30 or the Dow.
Serious-minded investors, such as technical traders and institutional investors, do not pay as much devotion to the Dow as the mainstream media.
Perhaps because of its relatively recognized name, evening news and print media can simply provide a headline.
Such as “The Dow Hit a New Record High Today” and information consumers will know what this means.
The S&P 500, known as the “S&P 500” or simply “market”, is one of the most widely used indicators of a large segment of the US stock market.
The index represents about 500 US-based companies and covers about 75% of the US stock market.
Many investors use one of the best S&P 500 funds as a primary indicator in a mutual fund or ETF portfolio.
The NASDAQ system, or the National Association of Securities Bidding for Securities Dealers, acts like a stock exchange such as the well-known New York Stock Exchange (NYSE) on Wall Street.
The first Nasdaq market differs from the New York Stock Exchange because it is:
- and the first fully automated the network.
- The first electronic stock market index.
- and the successor of the OTC system.
NASDAQ is also known for its high relative concentration in technology stocks.
Along with the Dow and the S&P 500, NASDAQ is one of the most-watched indices.
The main index on the NASDAQ is NASDAQ Composite, which consists of more than 3,000 shares, but the most famous index may be NASDAQ 100.
NASDAQ-traded stocks typically have four-character code symbols, such as MSFT for Microsoft or TWTR for Twitter.
Wilshire Index 5000
Often called the “Total Stock Market Index”, Wilshire 5000 is the broadest stock market index – a sample of more than 5,000 shares representing a range of market value (for example, large capital, medium, and small blocks).
It is important for investors to note that Wilshire 5000 has been determined by market value.
It means that large companies (companies with the largest market value) will account for a larger portion (among large companies) of a percentage of smaller companies.
In other words, investors may feel that they are diversified because they are exposed to many different capitalized stocks.
However, extreme exposure to large-cap stocks is so important that performance has a high (similar) relationship with most large-cap equity funds.
For this reason, many investors choose to use the S&P 500 Index Fund to represent large-cap stocks and a separate index, such as Russell 2000, to represent small-cap stocks in their portfolio.
Russell 3000 Index
Not to be confused with Russell 2000 (see below), the Russell 3000 is a stock index representing about 3,000 stocks that measure the performance of the largest US companies.
The Russell 3000 is often called the broad market index because it accounts for about 98% of the investable US stock market.
Mutual funds that invest in a way that replicates the Russell 3000 Index can be good options in building a portfolio.
However, for diversification purposes, investors should note that Russell 3000 should be considered the bulk of the portfolio.
Therefore must have a representation of other types or categories of funds.
Such as small capital stocks, foreign shares and fixed income (bonds) within Portfolio.
Russell 2000 Index
Russell 2000 is an index that is part of the small equity capital of the world of equity investment. As the name implies, the index covers about 2,000 of the smallest companies, based on market value.
According to the Russell 2000 Index founder, Russell Investments:
The index “was created to provide a comprehensive and unbiased measure of micro-capital”
This makes Russell 2000 Index funds and ETFs a good compliment to a large capital index, such as the S&P 500, to build a portfolio.
S&P 400 Index
S&P Midcap 400, also known as the S&P 400, is one of the most important US stock indices in the mid-cap stock market. According to Standard & Poor’s, “S&P MidCap 400® offers investors a benchmark for medium-sized businesses.
The index covers more than 7% of the US stock market and seeks to remain an accurate measure of medium-sized companies.
Its refers to the risks and return characteristics of the mid-wider universe on an ongoing basis. ”
According to Morningstar, the “average market value” ranges from $ 200 million to $ 5 billion market value.
This may sound great, but companies are not famous until they reach billions of dollars.
For reference and comparison, cap stocks may include some companies that you may have heard of, such as the whole food market, while a large-cap company, such as Wal-Mart, is much larger in market value ($ 230 billion in 2012).
MSCI is an acronym for Morgan Stanley Capital Investments. There are several MSCI indicators, which are benchmarks for the performance of a foreign securities portfolio.
The main MSCI indexes include:
1. MSCI ACWI: ACWI is a shortcut that means the All Country World Index.
2. MSCI EAFE: EAFE is an acronym for Europe, Australia, and the Far East, and is widely accepted as a standard for international markets.
3. MSCI EAFE: A collection of 21 individual country indexes that collectively represent many of the world’s major markets.
4. MSCI World: This covers indices of more than 1,600 securities from developed countries around the world in the stock exchange, hence the name.
This index also covers the US, and for US investors, MSCI World is not a true index of foreign stocks because it includes many domestic US stocks.
4. MSCI Abbreviations: If you see the abbreviation “IL” next to the index name, the index is in the local currency.
If you see “DM” it measures developed markets and if you see “EM” it means emerging markets.
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