Stock market indices are a weighted measure of the top-performing stocks that represents a hypothetical portfolio. The index derives its value from the underlying and helps investors compare the market performance between different periods. Several investors, portfolio managers, and exchange-traded funds (ETF) follow indices to gauge market movement. Indices are of three common types:
- Global indices
- Regional indices
- National indices
Global Stock Market Indices
Global stock market indices track equities from all around the world, like the MSCI World Index, which follow large and mid-cap equities across 23 developed countries covering 85 percent of the free-float adjusted market capitalisation of each country. These MSCI indices are potential stock market performance metrics and often used as the basis for exchange-traded funds. Since ETFs follow these stocks to create a portfolio, it allows investors to profit from the indices. Apart from MSCI, other popular global indices are
- FTSE All-World Index
- S&P Global 100 Index
- S&P Global 1200 Index
- Dow Jones Global Titans 50
What Is The Role Of The Global Indices?
- Like stock market indices, global indices follow the value of a section of the world’s financial market and reflect its health
- These give investors an idea of market performance
- Often market indices in other countries mimic the movement of the global index and rise and fall accordingly. So, these indices function as a cursor for other indices
- These help investors and analysts to compare investments