Index

A statistical measure that tracks the performance of a group of securities representing a particular market or sector. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite are among the most widely followed equity indices. You cannot invest directly in an index, but index funds and ETFs replicate their performance. Indices serve as benchmarks -- if your portfolio underperforms the S&P 500, you would have been better off buying a simple index fund.