Performance Index

A performance index is a stock market index that accounts for dividend distributions and other returns yielded by a stock, in addition to gains in the stock’s price. The performance calculation is based on the assumption that dividends are reinvested into the same stock. The principle is similar to that employed by an accumulating exchange-traded fund (ETF).

Because dividends are accounted for, it is possible that a performance index may grow even when stock prices fall. The counterpart of a performance index is a price index, which only accounts for stock prices.

Most indexes are published in both price index and performance index versions. In most cases, the price index that does not account for dividends is better known. Exceptions include the DAX and the Swiss Performance Index (SPI), with mentions of these indexes by experts and media generally referring to the performance index versions.

More on this topic:
Stock market index explained
Price index explained
How to invest in global stock indexes
Swiss stock indexes compared