Mutual FundsIndex Funds |
What is a “market index”? |
A market index is a collection or grouping of stocks that tracks the price performance of this selection of stocks. Indexes may cover any aspect of our economy, and may be quite broad or specific in focus, depending on the index. Some indexes use a market capitalization of individual stocks in order to weight each stock component of the index. Others, such as the Dow, use a special calculation in order to weight each stock component of its average.