5 Key Investment Strategies to Learn Before Trading - Investopedia
Passive index investing can be a great choice for beginner investors starting to explore the stock market. It's an ideal entry point for ...
index
Passive index investing has gained significant popularity since the introduction of passive index-based mutual funds in the 1970s and then similar ETFs in 1993. Unlike actively managed funds, where an individual or team makes decisions on the underlying assets in an attempt to beat the market, passive mutual funds and ETFs track an <anchor>index</anchor> like the S&P 500; they don't work to beat the market so much as match it.
What Is an Index? Examples, How It's Used, and How to Invest
What Is an Index? Examples, How It's Used, and How to Invest

[Skip to content](#skip-to-content)

[Investopedia Homepage](/)

- [Investing](https://www.investopedia.com/investing-4427685)  - [Stocks](https://www.investopedia.com/stocks-4427785)
  - [Cryptocurrency](https://www.investopedia.com/cryptocurrency-4427699)
  - [Bonds](https://www.investopedia.com/bonds-4689778)
  - [ETFs](https://www.investopedia.com/etfs-4427784)
  - [Options and Derivatives](https://www.investopedia.com/options-and-derivatives-trading-4689663)
  - [Commodities](https://www.investopedia.com/commodities-4427780)
  - [Trading](https://www.investopedia.com/trading-4427765)
  - [Automated Investing](https://www.investopedia.com/financial-technology-and-automated-investing-4689759)
  - [Brokers](https://www.investopedia.com/brokers-4689772)
  - [Fundamental Analysis](https://www.investopedia.com/fundamental-analysis-4689757)
  - [Markets](https://www.investopedia.com/markets/)
  - [View All](https://www.investopedia.com/investing-4427685)
- [Simulator](https://www.investopedia.com/simulator/?inv_to_sim=global_nav)  - [Login / Portfolio](https://www.investopedia.com/simulator/portfolio)
  - [Trade](https://www.investopedia.com/simulator/trade/stocks)
  - [Research](https://www.investopedia.com/simulator/research)
  - [My Games](https://www.investopedia.com/simulator/games/my-games)
  - [Leaderboard](https://www.investopedia.com/simulator/games)
- [Banking](https://www.investopedia.com/banking-4427754)  - [Savings Accounts](https://www.investopedia.com/savings-accounts-4689728)
  - [Certificates of Deposit (CDs)](https://www.investopedia.com/certificate-of-deposits-4689733)
  - [Money Market Accounts](https://www.investopedia.com/money-market-account-4689730)
  - [Checking Accounts](https://www.investopedia.com/checking-accounts-4689732)
  - [View All](https://www.investopedia.com/banking-4427754)
- [Personal Finance](https://www.investopedia.com/personal-finance-4427760)  - [Budgeting and Saving](https://www.investopedia.com/budgeting-and-savings-4427755)
  - [Personal Loans](https://www.investopedia.com/personal-loans-4689729)
  - [Insurance](https://www.investopedia.com/insurance-4427716)
  - [Mortgages](https://www.investopedia.com/mortgage-4689703)
  - [Credit and Debt](https://www.investopedia.com/credit-and-debt-4689724)
  - [Student Loans](https://www.investopedia.com/student-loans-4689727)
  - [Taxes](https://www.investopedia.com/taxes-4427724)
  - [Credit Cards](https://www.investopedia.com/credit-card-4689721)
  - [Financial Literacy](https://www.investopedia.com/financial-literacy-resource-center-7151950)
  - [Retirement](https://www.investopedia.com/retirement-planning-4689695)
  - [View All](https://www.investopedia.com/personal-finance-4427760)
- [Economy](https://www.investopedia.com/economy-4689801)  - [Government and Policy](https://www.investopedia.com/government-and-policy-4689793)
  - [Monetary Policy](https://www.investopedia.com/monetary-policy-4689792)
  - [Fiscal Policy](https://www.investopedia.com/fiscal-policy-4689796)
  - [Economics](https://www.investopedia.com/economics-4689800)
  - [View All](https://www.investopedia.com/economy-4689801)
- [News](https://www.investopedia.com/news-4427706)  - [Markets](https://www.investopedia.com/markets-news-4427704)
  - [Companies](https://www.investopedia.com/company-news-4427705)
  - [Earnings](https://www.investopedia.com/earnings-reports-5218419)
  - [CD Rates](https://www.investopedia.com/certificates-deposit-news-7111770)
  - [Mortgage Rates](https://www.investopedia.com/mortgage-rates-5184598)
  - [Economy](https://www.investopedia.com/economic-news-5218422)
  - [Government](https://www.investopedia.com/political-news-4689737)
  - [Crypto](https://www.investopedia.com/cryptocurrency-news-5114163)
  - [ETFs](https://www.investopedia.com/etf-news-5218416)
  - [Personal Finance](https://www.investopedia.com/personal-finance-news-5114159)
  - [View All](https://www.investopedia.com/news-4427706)
- [Reviews](https://www.investopedia.com/financial-product-reviews-7110783)  - [Best Online Brokers](https://www.investopedia.com/best-online-brokers-4587872)
  - [Best Savings Rates](https://www.investopedia.com/best-high-yield-savings-accounts-4770633)
  - [Best CD Rates](https://www.investopedia.com/best-cd-rates-4770214)
  - [Best Life Insurance](https://www.investopedia.com/best-life-insurance-companies-4845858)
  - [Best Personal Loans](https://www.investopedia.com/best-personal-loans-4773300)
  - [Best Mortgage Rates](https://www.investopedia.com/mortgage-rates-5094943)
  - [Best Money Market Accounts](https://www.investopedia.com/best-money-market-accounts-5096917)
  - [Best Auto Loan Rates](https://www.investopedia.com/best-auto-loan-rates-4846394)
  - [Best Credit Repair Companies](https://www.investopedia.com/best-credit-repair-companies-4843898)
  - [Best Credit Cards](https://www.investopedia.com/best-credit-cards-4801582)
  - [View All](https://www.investopedia.com/financial-product-reviews-7110783)

[Live](https://www.investopedia.com/dow-jones-today-09132024-8711980)

- SearchSearch






Please fill out this field.


SearchSearch

Please fill out this field.

- [Investing](https://www.investopedia.com/investing-4427685)


Investing



- [Stocks](https://www.investopedia.com/stocks-4427785)
- [Cryptocurrency](https://www.investopedia.com/cryptocurrency-4427699)
- [Bonds](https://www.investopedia.com/bonds-4689778)
- [ETFs](https://www.investopedia.com/etfs-4427784)
- [Options and Derivatives](https://www.investopedia.com/options-and-derivatives-trading-4689663)
- [Commodities](https://www.investopedia.com/commodities-4427780)
- [Trading](https://www.investopedia.com/trading-4427765)
- [Automated Investing](https://www.investopedia.com/financial-technology-and-automated-investing-4689759)
- [Brokers](https://www.investopedia.com/brokers-4689772)
- [Fundamental Analysis](https://www.investopedia.com/fundamental-analysis-4689757)
- [Markets](https://www.investopedia.com/markets/)
- [View All](https://www.investopedia.com/investing-4427685)

- [Simulator](https://www.investopedia.com/simulator/?inv_to_sim=global_nav)


Simulator



- [Login / Portfolio](https://www.investopedia.com/simulator/portfolio)
- [Trade](https://www.investopedia.com/simulator/trade/stocks)
- [Research](https://www.investopedia.com/simulator/research)
- [My Games](https://www.investopedia.com/simulator/games/my-games)
- [Leaderboard](https://www.investopedia.com/simulator/games)

- [Banking](https://www.investopedia.com/banking-4427754)


Banking



- [Savings Accounts](https://www.investopedia.com/savings-accounts-4689728)
- [Certificates of Deposit (CDs)](https://www.investopedia.com/certificate-of-deposits-4689733)
- [Money Market Accounts](https://www.investopedia.com/money-market-account-4689730)
- [Checking Accounts](https://www.investopedia.com/checking-accounts-4689732)
- [View All](https://www.investopedia.com/banking-4427754)

- [Personal Finance](https://www.investopedia.com/personal-finance-4427760)


Personal Finance



- [Budgeting and Saving](https://www.investopedia.com/budgeting-and-savings-4427755)
- [Personal Loans](https://www.investopedia.com/personal-loans-4689729)
- [Insurance](https://www.investopedia.com/insurance-4427716)
- [Mortgages](https://www.investopedia.com/mortgage-4689703)
- [Credit and Debt](https://www.investopedia.com/credit-and-debt-4689724)
- [Student Loans](https://www.investopedia.com/student-loans-4689727)
- [Taxes](https://www.investopedia.com/taxes-4427724)
- [Credit Cards](https://www.investopedia.com/credit-card-4689721)
- [Financial Literacy](https://www.investopedia.com/financial-literacy-resource-center-7151950)
- [Retirement](https://www.investopedia.com/retirement-planning-4689695)
- [View All](https://www.investopedia.com/personal-finance-4427760)

- [Economy](https://www.investopedia.com/economy-4689801)


Economy



- [Government and Policy](https://www.investopedia.com/government-and-policy-4689793)
- [Monetary Policy](https://www.investopedia.com/monetary-policy-4689792)
- [Fiscal Policy](https://www.investopedia.com/fiscal-policy-4689796)
- [Economics](https://www.investopedia.com/economics-4689800)
- [View All](https://www.investopedia.com/economy-4689801)

- [News](https://www.investopedia.com/news-4427706)


News



- [Markets](https://www.investopedia.com/markets-news-4427704)
- [Companies](https://www.investopedia.com/company-news-4427705)
- [Earnings](https://www.investopedia.com/earnings-reports-5218419)
- [CD Rates](https://www.investopedia.com/certificates-deposit-news-7111770)
- [Mortgage Rates](https://www.investopedia.com/mortgage-rates-5184598)
- [Economy](https://www.investopedia.com/economic-news-5218422)
- [Government](https://www.investopedia.com/political-news-4689737)
- [Crypto](https://www.investopedia.com/cryptocurrency-news-5114163)
- [ETFs](https://www.investopedia.com/etf-news-5218416)
- [Personal Finance](https://www.investopedia.com/personal-finance-news-5114159)
- [View All](https://www.investopedia.com/news-4427706)

- [Reviews](https://www.investopedia.com/financial-product-reviews-7110783)


Reviews



- [Best Online Brokers](https://www.investopedia.com/best-online-brokers-4587872)
- [Best Savings Rates](https://www.investopedia.com/best-high-yield-savings-accounts-4770633)
- [Best CD Rates](https://www.investopedia.com/best-cd-rates-4770214)
- [Best Life Insurance](https://www.investopedia.com/best-life-insurance-companies-4845858)
- [Best Personal Loans](https://www.investopedia.com/best-personal-loans-4773300)
- [Best Mortgage Rates](https://www.investopedia.com/mortgage-rates-5094943)
- [Best Money Market Accounts](https://www.investopedia.com/best-money-market-accounts-5096917)
- [Best Auto Loan Rates](https://www.investopedia.com/best-auto-loan-rates-4846394)
- [Best Credit Repair Companies](https://www.investopedia.com/best-credit-repair-companies-4843898)
- [Best Credit Cards](https://www.investopedia.com/best-credit-cards-4801582)
- [View All](https://www.investopedia.com/financial-product-reviews-7110783)

- [Financial Terms](https://www.investopedia.com/financial-term-dictionary-4769738)
- [Newsletter](https://www.investopedia.com/investopedia-newsletter-opt-in-7095821)
- [About Us](https://www.investopedia.com/about-us-5093223)

Follow Us

- [Visit Investopedia's Facebook](https://www.facebook.com/Investopedia/)
- [Visit Investopedia's Instagram](https://www.instagram.com/investopedia/?hl=en)
- [Visit Investopedia's LinkedIn](https://www.linkedin.com/company/investopedia-ulc)
- [Visit Investopedia's TikTok](https://www.tiktok.com/@investopedia)
- [Visit Investopedia's X](https://twitter.com/investopedia)
- [Visit Investopedia's YouTube](https://www.youtube.com/c/investopedia)

Table of Contents

Expand

Table of Contents

- [What Is an Index?](#toc-what-is-an-index)

- [Understanding Indexes](#toc-understanding-indexes)

- [Index Investing](#toc-index-investing)

- [Examples](#toc-index-examples)

- [FAQs](#toc-what-is-an-index-fund)

- [The Bottom Line](#toc-the-bottom-line)


- [Fund Trading](https://www.investopedia.com/fund-trading-4689673)
- [Index Trading Strategy](https://www.investopedia.com/index-trading-strategy-and-education-4689670)

# What Is an Index? Examples, How It's Used, and How to Invest

By

[James Chen](https://www.investopedia.com/contributors/101529/)

[Full Bio](https://www.investopedia.com/contributors/101529/)

- [Visit James Chen's LinkedIn](https://www.linkedin.com/in/jameschenfx/)
- [Visit James Chen's X](https://twitter.com/JamesChenFX)

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

Learn about our [editorial policies](/legal-4768893#editorial-policy)

Updated April 21, 2024

Reviewed by

[Samantha Silberstein](https://www.investopedia.com/samantha-silberstein-5115118)

Reviewed bySamantha Silberstein

[Full Bio](https://www.investopedia.com/samantha-silberstein-5115118)

- [Visit James Chen's LinkedIn](https://www.linkedin.com/in/samantha-silberstein)
- [Visit James Chen's X](https://twitter.com/SammSilb)

Samantha (Sam) Silberstein, CFP®, CSLP®, EA, is an experienced financial consultant. She has a demonstrated history of working in both institutional and retail environments, from broker-dealers to RIAs. She is a current CFA level 3 candidate and also has her FINRA Series 7 and 63 licenses. Throughout her career, Samantha has used her expertise and various licenses and certifications to provide in-depth advice about household and business-specific financial planning, investing, credit cards, debt, student loans, taxes, retirement, and income strategies.

Learn about our [Financial Review Board](/investopedia-financial-review-board-5076269)

Fact checked by

[Ryan Eichler](https://www.investopedia.com/ryan-eichler-5217138)

Fact checked byRyan Eichler

[Full Bio](https://www.investopedia.com/ryan-eichler-5217138)

- [Visit James Chen's LinkedIn](https://www.linkedin.com/in/ryan-eichler-13136912a/)

Ryan Eichler holds a B.S.B.A with a concentration in Finance from Boston University. He has held positions in, and has deep experience with, expense auditing, personal finance, real estate, as well as fact checking & editing.

Learn about our [editorial policies](/legal-4768893#editorial-policy)

Part of the Series

Guide to Index Fund Investing

Introduction to Index Funds

1. [What Are Index Funds, and How Do They Work?](https://www.investopedia.com/terms/i/indexfund.asp)
2. [Index Fund](https://www.investopedia.com/terms/i/index.asp)
CURRENT ARTICLE

3. [Investing in Index Funds](https://www.investopedia.com/investing-in-index-funds-4771002)
4. [Is it Possible to Invest in an Index?](https://www.investopedia.com/ask/answers/how-to-invest-in-an-index/)
5. [The Lowdown on Index Funds](https://www.investopedia.com/investing/the-lowdown-on-index-funds/)
6. [Tracker Fund](https://www.investopedia.com/terms/t/trackerfund.asp)

Index Fund Examples

1. [How Can I Buy an S&P 500 Fund?](https://www.investopedia.com/ask/answers/how-can-i-buy-sp-500-fund/)
2. [Top S&P 500 Index Funds](https://www.investopedia.com/articles/markets/101415/4-best-sp-500-index-funds.asp)
3. [Put $10,000 in the S&P 500 ETF and Wait 20 Years](https://www.investopedia.com/articles/personal-finance/022216/put-10000-sp-500-etf-and-wait-20-years.asp)
4. [How Vanguard Index Funds Work](https://www.investopedia.com/articles/investing/111715/how-vanguard-index-funds-work.asp)
5. [Vanguard Total Stock Index vs. Vanguard 500 Index Funds](https://www.investopedia.com/articles/investing/111215/vanguard-total-stock-index-vs-vanguard-500-index-fund.asp)
6. [The 4 Best Total Market Index Funds](https://www.investopedia.com/articles/markets/101515/4-best-total-market-index-funds.asp)
7. [Top Small Cap U.S. Index Funds](https://www.investopedia.com/articles/investing/121715/5-best-us-smallcap-index-mutual-funds.asp)

Index Fund Risks and Considerations

1. [Index Mutual Funds vs. Index ETFs](https://www.investopedia.com/financial-edge/0612/index-mutual-funds-vs.-index-etfs.aspx)
2. [5 Things You Need to Know About Index Funds](https://www.investopedia.com/articles/investing/103114/5-things-you-need-know-about-index-funds.asp)
3. [5 Reasons to Avoid Index Funds](https://www.investopedia.com/articles/stocks/09/reasons-to-avoid-index-funds.asp)
4. [Can an Index Fund Investor Lose Everything?](https://www.investopedia.com/ask/answers/06/canindexfundsgounder.asp)
5. [What Is Considered a Good Expense Ratio?](https://www.investopedia.com/ask/answers/032715/when-expense-ratio-considered-high-and-when-it-considered-low.asp)
6. [The Hidden Differences Between Index Funds](https://www.investopedia.com/articles/mutualfund/03/061103.asp)

Definition

Indexes measure the performance of a basket of securities intended to replicate a certain area of the market.

## What Is an Index?

A financial index produces a numeric score based on inputs such as a variety of asset prices. It can be used to track the performance of a group of assets in a standardized way. Indexes typically measure the performance of a basket of securities intended to replicate a certain area of the market.

These could be constructed as a broad-based index that captures the entire market, such as the Standard & Poor's 500 Index or Dow Jones Industrial Average (DJIA), or more specialized, such as indexes that track a particular industry or segment, such as the Russell 2000 Index, which tracks only small-cap stocks.

### Key Takeaways

- An index measures the price performance of a basket of securities using a standardized metric and methodology.
- Indexes in financial markets are often used as benchmarks to evaluate an investment's performance against.
- Some of the most important indexes in the U.S. markets are the S&P 500 and the Dow Jones Industrial Average.
- Passive index investing has become a popular low-cost way to replicate the returns of popular indices such as the S&P 500 Index or Dow Jones Industrial Average.
- Benchmarking your investment strategy against the appropriate index is key to understanding a portfolio's performance.

Investopedia / Mira Norian

## Understanding Indexes

Indexes are also created to measure other financial or economic data such as interest rates, inflation, or manufacturing output. Indexes often serve as [benchmarks](https://www.investopedia.com/terms/b/benchmark.asp) against which to evaluate the performance of a portfolio's returns. One popular investment strategy, known as [indexing](https://www.investopedia.com/terms/i/index-investing.asp), is to try to replicate such an index in a [passive](https://www.investopedia.com/terms/p/passiveinvesting.asp) manner rather than trying to outperform it.

Indexes in finance are typically used to track a statistical measure of change in various security prices. In finance, it typically refers to a statistical measure of change in a securities market. In the case of [financial markets](https://www.investopedia.com/terms/f/financial-market.asp), stock and [bond market](https://www.investopedia.com/terms/b/bondmarket.asp) indexes consist of a hypothetical portfolio of securities representing a particular market or a segment of it. (You cannot invest directly in an index.) The S&P 500 Index and the [Bloomberg US Aggregate Bond Index](https://www.investopedia.com/terms/l/lehmanaggregatebondindex.asp) are common benchmarks for the U.S. stock and bond markets, respectively. In reference to mortgages, it refers to a benchmark interest rate created by a third party.

Each index related to the stock and bond markets has its own calculation methodology. In most cases, the relative change of an index is more important than the actual numeric value representing the index. For example, if the [FTSE 100 Index](https://www.investopedia.com/terms/f/ftse.asp) is at 6,670.40, that number tells investors the index is nearly seven times its base level of 1,000. However, to assess how the index has changed from the previous day, investors must look at the amount the index has fallen, often expressed as a percentage.

## Index Investing

Indexes are also often used as benchmarks against which to measure the performance of [mutual funds](https://www.investopedia.com/terms/m/mutualfund.asp) and [exchange-traded funds](https://www.investopedia.com/terms/e/etf.asp) (ETFs). For instance, many mutual funds compare their returns to the return in the S&P 500 Index to give investors a sense of how much more or less the managers are earning on their money than they would make in an [index fund](https://www.investopedia.com/terms/i/indexfund.asp).

"Indexing" is a form of passive fund management. Instead of a fund portfolio manager actively [stock picking](https://www.investopedia.com/terms/s/stockpick.asp) and [market timing](https://www.investopedia.com/terms/m/markettiming.asp)—that is, choosing securities to invest in and strategizing when to buy and sell them—the fund manager builds a portfolio wherein the holdings mirror the securities of a particular index. The idea is that by mimicking the profile of the index—the stock market as a whole, or a broad segment of it—the fund will match its performance as well.

Since you cannot invest directly in an index, index funds are created to track their performance. These funds incorporate securities that closely mimic those found in an index, thereby allowing an investor to bet on its performance, for a fee. An example of a popular index fund is the [Vanguard S&P 500 ETF](https://www.investopedia.com/articles/investing/121814/look-vanguards-sp-500-etf.asp) ( [VOO](https://www.investopedia.com/markets/quote?tvwidgetsymbol=voo)), which closely mirrors the S&P 500 Index.

When putting together mutual funds and ETFs, fund sponsors attempt to create portfolios mirroring the components of a certain index. This allows an investor to buy a security likely to rise and fall in tandem with the stock market as a whole or with a segment of the market.

## Index Examples

The S&P 500 Index is one of the world's [best-known market proxy indexes](https://www.investopedia.com/terms/m/market-proxy.asp) and one of the most commonly used benchmarks for the [stock market](https://www.investopedia.com/terms/s/stockmarket.asp). It includes 80% of the total stocks traded in the United States. Conversely, the Dow Jones Industrial Average is also well known, but represents stock values from just 30 of the nation's publicly traded companies. Other prominent indexes include the [Nasdaq 100 Index](https://www.investopedia.com/terms/n/nasdaq100.asp), [Wilshire 5000 Total Market Index](https://www.investopedia.com/terms/w/wilshire5000equityindex.asp), MSCI [EAFE Index](https://www.investopedia.com/terms/e/eafe_index.asp), and the Bloomberg US Aggregate Bond Index.

Like mutual funds, indexed [annuities](https://www.investopedia.com/terms/a/annuity.asp) are tied to a trading index. However, rather than the fund sponsor trying to put together an investment portfolio likely to closely mimic the index in question, these securities feature a rate of return that follows a particular index but typically have caps on the returns they provide. For example, if an investor buys an annuity indexed to the Dow Jones and it has a cap of 10%, its rate of return will be between 0 and 10%, depending on the annual changes to that index. Indexed annuities allow investors to buy securities that grow along with broad market segments or the total market.

[Adjustable-rate mortgages](https://www.investopedia.com/terms/a/arm.asp) feature interest rates that adjust over the life of the loan. The adjustable interest rate is determined by adding a margin to an index. One of the most popular indexes on which mortgages are based is the [London Inter-bank Offer Rate](https://www.investopedia.com/terms/l/libor.asp) (LIBOR). For example, if a mortgage indexed to the LIBOR has a 2% margin and the LIBOR is 3%, the interest rate on the loan is 5%.

## What Is an Index Fund?

An index fund is a mutual fund or ETF that seeks to replicate the performance of an index, often by constructing its portfolio to mirror that of the index itself. Index investing is considered a passive strategy since it does not involve any stock picking or active management. Studies show that over time, indexing strategies tend to perform better than stock picking strategies. Because they are passive index funds also tend to have lower fees and tax exposure.

## What Are Different Ways to Construct an Index?

Indexes can be built in a number of ways, often with consideration to how to weight the various components of the index. The three main ways include:

- A market-cap, or [capitalization-weighted index](https://www.investopedia.com/terms/c/capitalizationweightedindex.asp) puts more weight in the index to those components that have the largest [market capitalization](https://www.investopedia.com/terms/m/marketcapitalization.asp) (market value), such as the S&P 500
- A [price-weighted index](https://www.investopedia.com/terms/p/priceweightedindex.asp) puts more weight to those components with the highest prices (such as the Dow Jones Industrial Average)
- An [equal-weighted index](https://www.investopedia.com/terms/e/equalweight.asp) allocates each component with the same weights (this is sometimes called an [unweighted index](https://www.investopedia.com/terms/u/unweightedindex.asp))

## Why Are Indexes Useful?

Indexes are [useful for providing valid benchmarks](https://www.investopedia.com/articles/investing/011316/pros-and-cons-indexes.asp) against which to measure investment performance for a given strategy or portfolio. By understanding how a strategy does relative to a benchmark, one can understand its true performance.

Indexes also provide investors with a simplified snapshot of a large market sector, without having to examine every single asset in that index. For example, it would be impractical for an ordinary investor to study hundreds of different stock prices in order to understand the changing fortunes of different technology companies. A sector-specific index can show the average trend for the sector.

## What Are Some Major Stock Indexes?

In the United States, the three leading stock indexes are the Dow Jones Industrial Average, the S&P 500, the Nasdaq Composite, and the Russell 2000. For international markets, the [Financial Times Stock Exchange 100 (FTSE 100) Index](https://www.investopedia.com/terms/f/ftse.asp) and the [Nikkei 225](https://www.investopedia.com/terms/n/nikkei.asp) Index are popular proxies for the British and Japanese stock markets, respectively. Most countries with stock exchanges publish at least one index for their major stocks.

## What Are Some Bond Indexes?

While stock market indexes may most often come to mind, indexes are also constructed around other asset classes. In the bond market, for example, the [Bloomberg Aggregate Bond Index](https://www.investopedia.com/terms/l/lehmanaggregatebondindex.asp) tracks the investment grade bond market, while the [Emerging Market Bond Index](https://www.investopedia.com/terms/e/emerging-markets-bond-index.asp) looks at government bonds of emerging market economies.

## The Bottom Line

[Market indexes](https://www.investopedia.com/terms/m/marketindex.asp) provide a broad representation of how markets are performing. These indexes serve as benchmarks to gauge the movement and performance of market segments. Investors also use indexes as a basis for portfolio or passive index investing. In the U.S. such representative indexes include the large-cap S&P 500 and the technology-heavy Nasdaq 100.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our
[editorial policy.](https://www.investopedia.com/legal-4768893#EditorialPolicy)

1. S&P Dow Jones Indices. " [S&P 500](https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview)."

2. Bloomberg Barclays Indices. " [US Aggregate Index](https://data.bloomberglp.com/indices/sites/2/2016/08/2017-02-08-Factsheet-US-Aggregate.pdf)," Page 1.

3. FTSE Russell. " [FTSE 100 Index](https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=UKX&IsManual=false)," Pages 1-2.

4. Vanguard. " [Vanguard S&P 500 ETF (VOO)](https://investor.vanguard.com/etf/profile/overview/voo)."

5. S&P Dow Jones Indices. " [Dow Jones Industrial Average](https://www.spglobal.com/spdji/en/indices/equity/dow-jones-industrial-average/#overview)."

6. Nasdaq. " [NASDAQ 100](https://indexes.nasdaqomx.com/docs/FS_NDX.pdf)," Page 1.

7. Wilshire. " [Wilshire 5000 Total Market Index](https://wilshire.com/indexes/wilshire-5000-family/wilshire-5000-total-market-index)."

8. MSCI. " [MSCI EAFE Index](https://www.msci.com/documents/10199/822e3d18-16fb-4d23-9295-11bc9e07b8ba)," Page 1.

9. S&P Dow Jones Indices. “ [SPIVA Report Card](https://www.spglobal.com/spdji/en/research-insights/spiva/).”


Take the Next Step to Invest

Advertiser Disclosure

×

The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.

Part of the Series

Guide to Index Fund Investing

Introduction to Index Funds

1. [What Are Index Funds, and How Do They Work?](https://www.investopedia.com/terms/i/indexfund.asp)
2. [Index Fund](https://www.investopedia.com/terms/i/index.asp)
CURRENT ARTICLE

3. [Investing in Index Funds](https://www.investopedia.com/investing-in-index-funds-4771002)
4. [Is it Possible to Invest in an Index?](https://www.investopedia.com/ask/answers/how-to-invest-in-an-index/)
5. [The Lowdown on Index Funds](https://www.investopedia.com/investing/the-lowdown-on-index-funds/)
6. [Tracker Fund](https://www.investopedia.com/terms/t/trackerfund.asp)

Index Fund Examples

1. [How Can I Buy an S&P 500 Fund?](https://www.investopedia.com/ask/answers/how-can-i-buy-sp-500-fund/)
2. [Top S&P 500 Index Funds](https://www.investopedia.com/articles/markets/101415/4-best-sp-500-index-funds.asp)
3. [Put $10,000 in the S&P 500 ETF and Wait 20 Years](https://www.investopedia.com/articles/personal-finance/022216/put-10000-sp-500-etf-and-wait-20-years.asp)
4. [How Vanguard Index Funds Work](https://www.investopedia.com/articles/investing/111715/how-vanguard-index-funds-work.asp)
5. [Vanguard Total Stock Index vs. Vanguard 500 Index Funds](https://www.investopedia.com/articles/investing/111215/vanguard-total-stock-index-vs-vanguard-500-index-fund.asp)
6. [The 4 Best Total Market Index Funds](https://www.investopedia.com/articles/markets/101515/4-best-total-market-index-funds.asp)
7. [Top Small Cap U.S. Index Funds](https://www.investopedia.com/articles/investing/121715/5-best-us-smallcap-index-mutual-funds.asp)

Index Fund Risks and Considerations

1. [Index Mutual Funds vs. Index ETFs](https://www.investopedia.com/financial-edge/0612/index-mutual-funds-vs.-index-etfs.aspx)
2. [5 Things You Need to Know About Index Funds](https://www.investopedia.com/articles/investing/103114/5-things-you-need-know-about-index-funds.asp)
3. [5 Reasons to Avoid Index Funds](https://www.investopedia.com/articles/stocks/09/reasons-to-avoid-index-funds.asp)
4. [Can an Index Fund Investor Lose Everything?](https://www.investopedia.com/ask/answers/06/canindexfundsgounder.asp)
5. [What Is Considered a Good Expense Ratio?](https://www.investopedia.com/ask/answers/032715/when-expense-ratio-considered-high-and-when-it-considered-low.asp)
6. [The Hidden Differences Between Index Funds](https://www.investopedia.com/articles/mutualfund/03/061103.asp)

Take the Next Step to Invest

Advertiser Disclosure

×

The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.

Related Terms

[What Is the Profitability Index (PI)?](https://www.investopedia.com/terms/p/profitability.asp)

The profitability index (PI) measures a proposed project's costs and benefits by dividing the projected capital inflow by the investment.

[more](https://www.investopedia.com/terms/p/profitability.asp)

[What Are Index Funds, and How Do They Work?](https://www.investopedia.com/terms/i/indexfund.asp)

Index funds are pooled investments that passively aim to replicate the returns of market indexes.

[more](https://www.investopedia.com/terms/i/indexfund.asp)

[Credit Default Swap Index (CDX): What It Is and How It Works](https://www.investopedia.com/terms/d/dowjonescdx.asp)

The credit default swap index (CDX) is a financial instrument composed of a set of credit securities issued by North American or emerging market companies.

[more](https://www.investopedia.com/terms/d/dowjonescdx.asp)

[What Is a Lock-Up Period? How It Works, Main Uses, and Example](https://www.investopedia.com/terms/l/lockup-period.asp)

A lock-up period is a window of time in which investors of a hedge fund or other closely-held investment vehicle are not allowed to redeem or sell shares.

[more](https://www.investopedia.com/terms/l/lockup-period.asp)

[Nasdaq 100 Index: What It Is, How It's Weighted and Traded](https://www.investopedia.com/terms/n/nasdaq100.asp)

The Nasdaq 100 Index Includes Companies From Various Sectors Except for Companies in the Financial Sector. Discover More About the Nasdaq 100.

[more](https://www.investopedia.com/terms/n/nasdaq100.asp)

[What Is the Russell 1000 Index? Definition, Holdings, and Returns](https://www.investopedia.com/terms/r/russell_1000index.asp)

The Russell 1000 Index, a subset of the Russell 3000 Index, represents the 1,000 top companies by market capitalization in the United States.

[more](https://www.investopedia.com/terms/r/russell_1000index.asp)

Related Articles

[How To Invest in the S&P 500](https://www.investopedia.com/ask/answers/how-can-i-buy-sp-500-fund/) [Closed-End Funds vs. Open-End Funds: What's the Difference?](https://www.investopedia.com/financial-edge/0712/closed-end-vs.-open-end-funds.aspx) [What Is the Profitability Index (PI)?](https://www.investopedia.com/terms/p/profitability.asp) [What Are Index Funds, and How Do They Work?](https://www.investopedia.com/terms/i/indexfund.asp) [10 Most-Loved Stocks in Hedge Funds: Goldman's VIP List](https://www.investopedia.com/investing/10-mostloved-stocks-hedge-funds-goldmans-vip-list/) [Credit Default Swap Index (CDX): What It Is and How It Works](https://www.investopedia.com/terms/d/dowjonescdx.asp)

Partner Links

[Investopedia Homepage](/)

- [Visit Investopedia's Facebook](https://www.facebook.com/Investopedia/)
- [Visit Investopedia's X](https://twitter.com/investopedia)
- [Visit Investopedia's Instagram](https://www.instagram.com/investopedia/?hl=en)
- [Visit Investopedia's LinkedIn](https://www.linkedin.com/company/investopedia-ulc)
- [Visit Investopedia's Newsletter](/investopedia-newsletter-opt-in-7095821)

[Access TRUSTe's Enterprise Privacy Certification program](//privacy.truste.com/privacy-seal/validation?rid=f8e1238d-6371-460f-8ea0-1b8cad9e9c4b)

- [About Us](/about-us-5093223)
- [Terms of Service](https://www.dotdashmeredith.com/brands-termsofservice)
- [Dictionary](/financial-term-dictionary-4769738)
- [Editorial Policy](/legal-4768893#editorial-policy)
- [Advertise](https://www.dotdashmeredith.com/)
- [News](/news-4427706)
- [Privacy Policy](https://www.dotdashmeredith.com/brands-privacy)
- [Contact Us](https://invcontent.zendesk.com/hc/en-us/requests/new)
- [Careers](https://www.dotdashmeredith.com/careers)
- Your Privacy Choices

- [#](https://www.investopedia.com/terms-beginning-with-num-4769350)
- [A](https://www.investopedia.com/terms-beginning-with-a-4769351)
- [B](https://www.investopedia.com/terms-beginning-with-b-4769352)
- [C](https://www.investopedia.com/terms-beginning-with-c-4769353)
- [D](https://www.investopedia.com/terms-beginning-with-d-4769354)
- [E](https://www.investopedia.com/terms-beginning-with-e-4769355)
- [F](https://www.investopedia.com/terms-beginning-with-f-4769356)
- [G](https://www.investopedia.com/terms-beginning-with-g-4769357)
- [H](https://www.investopedia.com/terms-beginning-with-h-4769358)
- [I](https://www.investopedia.com/terms-beginning-with-i-4769359)
- [J](https://www.investopedia.com/terms-beginning-with-j-4769360)
- [K](https://www.investopedia.com/terms-beginning-with-k-4769361)
- [L](https://www.investopedia.com/terms-beginning-with-l-4769362)
- [M](https://www.investopedia.com/terms-beginning-with-m-4769363)
- [N](https://www.investopedia.com/terms-beginning-with-n-4769364)
- [O](https://www.investopedia.com/terms-beginning-with-o-4769365)
- [P](https://www.investopedia.com/terms-beginning-with-p-4769366)
- [Q](https://www.investopedia.com/terms-beginning-with-q-4769367)
- [R](https://www.investopedia.com/terms-beginning-with-r-4769368)
- [S](https://www.investopedia.com/terms-beginning-with-s-4769369)
- [T](https://www.investopedia.com/terms-beginning-with-t-4769370)
- [U](https://www.investopedia.com/terms-beginning-with-u-4769371)
- [V](https://www.investopedia.com/terms-beginning-with-v-4769372)
- [W](https://www.investopedia.com/terms-beginning-with-w-4769373)
- [X](https://www.investopedia.com/terms-beginning-with-x-4769374)
- [Y](https://www.investopedia.com/terms-beginning-with-y-4769375)
- [Z](https://www.investopedia.com/terms-beginning-with-z-4769376)

Investopedia
is part of the [Dotdash Meredith](https://www.dotdashmeredith.com) publishing family.

By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

Cookies SettingsAccept All Cookies