What is an index?


An index is an aggregated safety that tracks the efficiency of a set of corporations or belongings. An instance is the FTSE 100, which tracks the efficiency of the highest 100 corporations on the London Stock Exchange (LSE).

Investors should purchase shares of index funds that ship returns primarily based on an indexes’ efficiency. Indexes are available quite a lot of varieties, akin to monitoring high corporations by market cap, or for particular sectors, akin to agriculture, vitality or manufacturing. Indexes are additionally used as benchmarks for monitoring how nicely shares in particular person corporations are performing in comparison with the broader market.

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