Betta Signals

Learn · Risk and performance

Index

A market index measures the performance of a basket of stocks selected to represent part of the stock market.

By Betta Signals Research Desk · Reviewed October 24, 2026

Plain-English definition: A market index measures the performance of a basket of stocks selected to represent part of the stock market.[1]

How the term is used

Market indexes can weight constituents in different ways, including by market capitalization or share price. An index fund holds securities or uses other techniques in an effort to track a selected index.[2]

What to check before relying on it

Price, total-return, and net-total-return versions can show different results. Check the index currency, dividend assumptions, launch date, and whether earlier history was back-tested.

Example

A price index can remain flat while its total-return version rises because the latter includes reinvested distributions.

BenchmarkExchange-traded fund (ETF)Total return

Research last reviewed: October 24, 2026. This definition is educational and does not evaluate a particular security.

Sources

  1. Investor.gov: Market Index — a market index as a measure of a group of securities. Accessed October 24, 2026.
  2. Investor.gov: Investor Bulletin on Index Funds — index weighting methods and how index funds seek to track market indexes. Accessed October 24, 2026.