Market Indices

Legacy_user

There are now 3.73m market indices:
https://www.ft.com/content/464baa26-e794-11e8-8a85-04b8afea6ea3
Everybody should be able to find a suitable index!

Linton

Economic wrote: »

There are now 3.73m market indices:
https://www.ft.com/content/464baa26-e794-11e8-8a85-04b8afea6ea3
Everybody should be able to find a suitable index!

Now the problem is to find a fund that tracks it.

A_T

So now there can be no excuse for overweighting the UK

short_butt_sweet

Linton wrote: »

Now the problem is to find a fund that tracks it.

i always thought it was backwards that there are more funds than there are individual securities for them to invest in. and now there are more indices than funds, which again seems the wrong way round.

londoninvestor

Matt Levine on this topic today.

The point is that the word “index,” in its modern financial-product usage, is capacious. The original idea of a stock index was that it was a relatively unchanging list of big stocks that was meant to represent “the market”: If you wanted to know how the market was doing, you could look at the index, and if the index was up that was good and if it was down that was bad.

But the rise of index funds has led to a demand for indexes that are intended to represent things other than the market as a whole, and that in many cases are intended not to be the market but to beat the market.

And so now basically any decision process that can create a list of stocks counts as an index. The term “index” has expanded from meaning “representative list of stocks” to mean “any mechanical process for choosing stocks” and also now “any process at all for choosing stocks”: A list of stocks, written down by a manager based on subjective criteria and changing at that manager’s discretion, can also be an index.