115 CFA
File: Equity Investments - Reading 37 - 4. Different Types of Security Market Indices

4. Different Types of Security Market Indices

h. describe types of equity indices;

i. describe types of fixed-income indices;

j. describe indices representing alternative investments;

k. compare types of security market indices.

What is a broad market index?
A broad market index represents an entire given equity market. Examples include the Russell 3000, the Wilshire 5000 Total Market Index, etc.

What is a multi-market index?
A multi-market index represents multiple security markets. For example, the Dow Jones World Stock Index includes 2,200 companies in 33 countries.

What is a sector index?
A sector index measures the performance of a narrow market segment, such as the biotechnology sector. It can be used to determine if a portfolio manager is good at sector allocation or not. It can also be used to track the performance of sector-specific funds.

What are style strategies?
Style strategies focus on the underlying characteristics common to certain investments. Growth is a different style than value, and large capitalization investing is a different style than small stock investing.

Are there more stocks or bonds in the world?
The universe of bonds is much broader than that of stocks.

What is a Fixed Income Index?
An index that includes a portfolio of similar bonds.

What is a Commodity Index?
A commodity price index is a fixed-weight index of selected commodity prices, which may be based on spot or futures prices. It is designed to be representative of the broad commodity asset class or a specific subset of commodities, such as energy or metals.

What are some different types of real estate indices?
Types of real estate indices include appraisal indices, repeat sales indices, and REIT indices which track the performance of publicly traded REITs.

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