When the rates on the securities within the index change, the index reflects these adjustments. If an index rises by 1% it means that the aggregate value with the securities within the index has gone up on average by 1% and vice versa. Index values are normally expressed as points. So for example on each day when the FTSE 100 rises by 56 points to finish at 560, it truly implies the index started at 504 points.
As well as becoming applied as benchmarks to measure the efficiency of a portfolio, particular sorts of investments are based on stock industry indices. Index tracker funds for instance track the efficiency of indices and investors in structured product may perhaps be searching for to capitalise on the performance (or lack of it) of an index or indices.
There are lots of distinctive kinds and categories of indices. A globe stock market place index for example the S&P Global 100 for instance is, as the name suggests, made up of large companies from all over the globe, whereas a national index for instance the S&P 500, the FTSE 100 or the Nikkei 225 reflects the efficiency of a group of equities inside the US, UK and Japanese stock markets.
You can find indices of asset classes . e. g. bonds and property and indices that measure the efficiency of companies over specific periods of time. penny stocks Some indices track particular industry sectors telecommunications and chemicals for instance while others focus on companies of a particular size such as smaller companies or large cap businesses. Ethical investors also have their own indices, one of which The FTSE4Good Index measures the performance of UK companies that are meeting globally recognised standards of corporate responsibility.