What is an Index?

Portfolios are constantly being compared to indices like The Dow Jones, S&P 500, Russell 2000, and the MSCI EAFE, but what exactly is an index?

An Index is a basket of investments used to track a market that readily indicates the market’s short and long-term trends.  Investors use indices to benchmark their performance and the performance of their investment managers. The index gives an indication of the level of risk that the manager is taking, and of the investment skill of the manager.

Take a look at the video below for a more thorough explanation of indices, a brief history of a few of the more common indices, and a look at how we have created custom benchmarks to measure the performance of the Artesys portfolios.