Stock market indexes measure the value of a section of a country’s stock market via a weighted average of selected stocks. These indexes help investors and analysts describe the market and compare different investments. Many mutual funds and exchange-traded funds (ETFs) attempt to track these indexes to provide investors with exposure to a given market.
The three most common types of indexes include:
- Global indexes
- Regional indexes
- National indexes
Learn more about global stock market indexes, regional stock market indexes, and national stock market indexes around the world, as well as some important considerations if you're an investor looking to gain exposure using these indexes.
Global Stock Market Indexes
Global stock market indexes track equities from all around the world. For example, the MSCI World Index tracks large and mid-cap equities across 23 developed countries covering approximately 85% of the free float-adjusted market capitalization in each country.
It’s worth noting that global stock market indexes weighted by market capitalization don’t offer exposure to emerging markets or frontier markets since they’re too small for inclusion.
Along with the MSCI, some of the most popular global stock market indexes include:
- FTSE All-World Index
- S&P Global 100 Index
- S&P Global 1200 Index
- Dow Jones Global Titans 50
Regional Stock Market Indexes
Regional stock market indexes track equities from specific regions around the world. For instance, these indexes may cover Asian, European, or Latin American equities. They help investors and analysts compare the performance of specific countries to a general region to highlight what assets are over- and under-performing. The funds tied to these indexes may also be helpful in building exposure to specific regions of the world.
Some of the most popular regional stock market indexes are listed below.
- S&P Asia 50 Index
- Dow Jones Asian Titans 50 Index
- FTSE ASEAN 40 Index
- Euro STOXX 50 Index
- FTSE Euro 100 Index
- S&P Europe 350 Index
- S&P Latin America 40 Index
National Stock Market Indexes
National stock market indexes provide exposure to individual countries. In some cases, the equities in these indexes will consist entirely of large-cap stocks, similar to the Dow Jones Industrial Average in the U.S. In other cases, the equities may be considered small-cap since the country may not have many large companies. This is often the case in emerging market and frontier market economies.
Here are some of the top global and national stock market indexes.
- SSE Composite Index
- SZSE Component Index
- CSI 300 Index
- Nikkei 225 Index
- TOPIX Index
- JPX-Nikkei Index 400
- DAX Performance Index
- TecDAX Index
- MDAX Index
- FTSE 100 Index
- FTSE All-Share Index
- FTSE techMark 100 Index
- CAC 40 Index
- CAC Next 20 Index
- CAC Mid 60 Index
- BSE SENSEX Index
- NSE of India Index
- Multi Commodity Exchange of India Index
- FTSE MIB Index
- FTSE Italia Mid Cap Index
- FTSE MIB Index
- BOVESPA Index
- IBrX 100 Index
- ITEL Index
- S&P/TSX 60 Index
- S&P/TSX Composite Index
- S&P/TSX Venture Composite Index
- KOSPI Index
- KOSDAQ Index
Other Stock Market Indexes
There are many other types of specialized stock market indexes for certain demographics. For example, the Dow Jones Islamic Market World and S&P 500 Shariah indexes are geared toward investors adhering to Islamic laws, while other indexes cater towards goals like Environmental-Social-Government (or ESG) investments.
Investors may want to consider these types of indexes, which may also provide exposure to global stocks with certain restraints.
Some popular alternative stock market indexes include:
- S&P Global BMI Shariah Index
- STOXX Global ESG Leaders Index
Invest in Stock Market Indexes
Investors can build exposure to these stock market indexes into their portfolios using mutual funds or exchange-traded funds that track the underlying index. For example, the iShares MSCI World ETF (URTH) tracks the popular MSCI World Index and provides exposure to global stock markets.
When evaluating mutual funds and ETFs, investors should consider a variety of different factors, including the fund's expense ratio, diversification, and other factors.
The Bottom Line
Global stock market indexes help investors and analysts describe the market and compare different investments. There are three types of stock market indexes, including global stock market indexes, regional stock market indexes, and national stock market indexes. Investors can leverage these indexes to gain exposure to international stock markets using mutual funds or exchange-traded funds tied to these indexes.
Frequently Asked Questions (FAQs)
How can following stock market indexes be helpful?
Indexes give you an idea of how a particular segment of the market is performing overall. By watching them, you can estimate how your particular investments will perform—or whether to invest in that particular market at all. Individual securities won't necessarily track right with the index, but if you invest in an index fund, you can get a reasonable feel for how your money will perform by watching the index on which the fund is based.
How do you read a stock market index?
Each index has a base value, which is the weighted average of the stocks in that particular index. What's most important is not the value itself but how much it changes over time. When you're comparing indexes, look at the percentage changes to get an idea of which ones are more volatile or trending in the right direction.