What is an Index

An index is a theoretical portfolio of stocks, bonds, commodities or other assets that represents what the average investor holds in his or her portfolio. Indexes serve as benchmark measurements of the overall performance of a market. For example, investors who want to know if the U.S. “market” is up or down today will look at the performance of the Standard and Poor’s 500 index which is a theoretical portfolio made up of the 500 largest U.S. stocks. Similarly an investor who wants to know if the Israel “market” is up or down today will look at the performance of one of BlueStar’s Israel Indexes such as the BlueStar Israel Global Index.

What is an Index Investment Fund?

An investor can invest in the “market” by buying shares of an investment fund that “tracks” an index benchmark. Investors who want exposure to a certain market or sector can do so through in index fund: one example of types of index fund that is growing in popularity is called an Exchange Traded Funds (ETFs).  On the most basic level, investors can buy shares of an ETF and the fund manager then buys small amount of all the companies that make up the theoretical portfolio which is the index.