An index is basically a compilation of stocks and other securities that match certain criteria. Among the best known are the DAX, the Nikkei Index or the Dow Jones Index. Indices differ in their portfolio allocation. Some only consider stocks of large companies, some only those of small or medium sized companies and some only consider certain sectors. Similar indices of one index issuer are often combined to a so-called index family.
In recent years, various indices were created that select companies according to sustainability oriented criteria. Index issuers work with exclusion and positive criteria, which are similar to those used by funds to determine which companies are admitted to the index. A special procedure is the best-in-class approach. Here, the best companies of a certain sector are selected for the index.
Indices fulfil an important role since they allow investors to determine the own investment success on the basis of this benchmark.
Specificity Index Fund: In recent years, more index funds and Exchange Traded Funds (ETFs) have been launched. An index fund buys the stocks in the proportion in which they are represented in the relevant index. A selection of Exchange Traded Funds (ETFs) is avaible in our fund database.