A stock index tracks changes in the value of a specific portfolio of stocks. It serves as a barometer that reveals the performance of a specific stock market, such as the stock market in a specific region or industry sector. A stock index may track the performance of just a few different stocks or of thousands of different stocks.
Stock indexes are published by stock exchanges, the financial and economic press, and other financial service providers. Most indexes are calculated in both price index and performance index versions. In many indexes, the weight given to each stock is based on its market capitalization.
There are many index funds and exchange-traded funds (ETFs) that are based on stock indexes. The portfolios of these funds replicate stock indexes as precisely as possible with the aim of matching the indexes performance.
Examples of major Swiss stock indexes include the Swiss Market Index (SMI), the Swiss Performance Index (SPI), and the Swiss Leader Index (SLI). The SMI is considered to be the most important gauge of the Swiss stock market. Other examples of well-known stock indexes are the DAX (Germany), the CAC 40 (France), the S&P 500, and the Nasdaq 100 (United States). Some global indexes like the FTSE All-World Index track the performance of a large portion of the global stock market.
More on this topic:
Overview of Swiss stock indexes
Global stock indexes explained
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