Can u explain me what is indices and their differences? How it is measured and waht are the uses of indices?

Question

For ASX

Answer 1

Indicies are groups of stocks, which have bees specifically selected to be in a group by the company maintaining the index. One such comany is S&P and another is Frank Russell. The companies within an index will have common characteristics. They create these indicies for so that performance can be measured against them and they set a standard depending on investment goals.

For example, the Russell 2000 is a small cap index, so any money manger that is managing small caps will track the performance of their portfolio agains the Russell 2000 (benchmark for performance is chosen by client).

The S&P 500 is designed to be a broad market index and probably the most well known.

Members of the index change periodically and this is decided by the company who owns the index.

There are alo ETFs and mutual funds created that are based on these indicies.