Indexes - or indices - are collections of selected stocks or other investments. Some
of the best known indexes include the S&P 500, which tracks the share price
performance of the 500 largest companies listed on the US exchanges, or the ASX 200,
which tracks the largest 200 companies listed in Australia. But there are also
indexes that track sectors and industries, like technology or clean energy, as well
as bonds, IPOs, currencies, growth stocks and more.
Index funds track these indexes, allowing investors to track their performance. They
do this by allowing to buy a basket of shares that matches the composition of the
index with just a single trade, rather than trying to buy all the stocks in a given
Index funds can be bought as either exchange-traded-funds (ETFs) or as mutual funds,
but ETFs will almost always have lower costs and can be bought and sold on the CMC
Markets Invest platform like any other share.