Understanding the Different Equity Indices

20 Sept

When we talk about investing in ‘the market’, we’re usually talking about an index. An index is a basket of securities designed to represent a particular slice of the market. Some are global, some are regional, and others zoom in on a country, sector, or company size.

You can’t invest in an index directly, but you can invest in mutual funds and ETFs that track them. Knowing which index you’re tracking matters, because different providers slice the market in different ways.

Major Global Index Providers

MSCI (Morgan Stanley Capital International)

MSCI World – developed markets, large and mid-caps.
MSCI Emerging Markets – emerging economies.
MSCI ACWI – developed + emerging combined.

FTSE Russell

FTSE 100 – the largest UK-listed firms.
FTSE All-Share – ~600 UK companies.
FTSE Global All Cap – thousands of stocks worldwide.

S&P Dow Jones Indices

S&P 500 – the core US large-cap benchmark.
Dow Jones Industrial Average (DJIA) – 30 large US firms, but unusual in being price-weighted. This means companies with a higher share price (regardless of market value) have more influence. That makes it a poor measure of the market as a whole, but it remains widely quoted out of tradition.
S&P Global BMI – broad global coverage.

STOXX (Deutsche Börse)

STOXX Europe 600 – 600 large, mid, and small-cap firms across Europe.
EURO STOXX 50 – the 50 largest eurozone companies.

CRSP (Chicago)

CRSP US Total Market – almost every listed US company.
CRSP US Large/Small/Value/Growth – used by Vanguard for style indices.

Russell (now part of FTSE Russell)

Russell 1000 – large-cap US.
Russell 2000 – small-cap US.
Russell 3000 – the broad US market.

US Market-Specific Indices

NASDAQ

NASDAQ Composite – all stocks listed on the NASDAQ exchange (over 3,000).
NASDAQ-100 – the 100 largest non-financial companies, heavily tilted to technology.

Wilshire

Wilshire 5000 – often called the ‘total US market’ index (though closer to ~3,500 stocks today).

NYSE Composite

All shares listed on the New York Stock Exchange.

Other Regional Benchmarks

Nikkei 225 (Japan) – 225 large companies, price-weighted like the Dow.
TOPIX (Japan) – ~2,000 companies, market-cap weighted.
DAX (Germany) – 40 large German companies.
CAC 40 (France) – 40 of the largest French firms.
S&P/TSX Composite (Canada) – the main Canadian benchmark.
ASX 200 (Australia) – top 200 companies by market cap.
Hang Seng Index (Hong Kong) – 50 large and mid-cap firms.
CSI 300 (China) – 300 of the largest Shanghai and Shenzhen listings.
BSE Sensex (India) – 30 large Indian companies.

What Sets Indices Apart?

Geography – global (MSCI ACWI), regional (STOXX Europe), or national (FTSE 100).
Company size – large-caps (S&P 500), small-caps (Russell 2000).
Style – value vs growth splits (MSCI World Value vs Growth).
Weighting method – market-cap weighted (most), price-weighted (Dow, Nikkei), equal-weighted, or fundamentals-based.
Methodology – each provider uses different criteria for eligibility, float adjustment, and rebalancing.

Why It Matters

Two ‘global equity’ funds may track very different benchmarks. An MSCI ACWI tracker, a FTSE Global All Cap tracker, and an S&P Global BMI tracker will each hold a different number of companies, with slightly different country weights.

Some indices, like the Dow or Nikkei, are widely quoted but less useful for investors because of their outdated price-weighting. Others, like MSCI ACWI or S&P 500, are more robust benchmarks.

Knowing which index your fund tracks helps you understand exactly what you own and whether you’re getting the exposure you intended.

This post is designed as a quick reference; a map of the most common benchmarks. For more detail, each provider publishes full methodology guides.

Kieran Cook