Definition 1.
A composite of securities that serves as a barometer for the overall market or some segment of it. The best known of these are the Dow Jones Industrial Average and the Standard & Poor''s 500, both of which reflect the performance of large American companies. Other indexes include the Russell 2000, which is an index of smaller stocks. Many indexes are much more specific. There is an American Stock Exchange Biotechnology Index, for instance, as well as indexes for emerging markets, long-term treasury bonds, and individual markets overseas (the Nikkei, for instance, in Tokyo). Index investors simply try to match a given index, keeping expenses low and acknowledging that it''s tough to beat the market. Using the appropriate index, investors can gauge how well they (or their mutual funds) are doing.
|