Broad-Based Index

An index designed to reflect the movement of the entire market. The smallest broad-based index is the Dow Jones Industrial Average with 30 industrial stocks, and the largest is the Russell 300 Index. Other examples include the S&P 500, Wilshire 5000 Total Market Index, AMEX Major Market Index, and the Value Line Composite Index.


Investors who want the maximum benefit of diversification can invest in securities that have as their underlying tracking instrument an index or other financial product made up of several, well-diversified stocks. Securities that are based on broad-based indices allow investors to effectively own the same basket of stocks that are contained in a major index while committing a small amount of financial resources.



Index Investing Tutorial - Get to know the most important market indexes, and the advantages and disadvantages of investing in them.

A Market By Any Other Name - The term "the market" is often used as though it has only one meaning, but there actually several indexes representing different markets.

The Lowdown On Index Funds - If you can't beat the market, why not join it? We go over your options.

You Can't Judge an Index Fund by Its Cover - Despite appearances, not all funds of this type render the same return. Find out why before you invest!

Indexes: The Good, The Bad And The Ugly - Indexes are good for tracking market trends, but these tracking devices are not perfect, so you need to determine just how much you can rely on them.

Introduction To Exchange-Traded Funds - Get into ETFs and enjoy the benefits of a mutual fund with the flexibility of a stock.
Related Terms

Diamonds

Dow Jones Industrial Average - DJIA

Index

Index Fund

iShares

Russell 2000 Index

Spiders - SPDRs

Standard and Poor's 500 Index - S&P 500

Value Line Index

Wilshire 5000 Total Market Index - TMWX

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