ABSTRACT
Indices are used as underlying vehicles for derivative products. Equally important, securities market indices are used to gauge or measure how well individual securities, an investment manager or a portfolio of securities, including separate accounts, pooled accounts as well as mutual funds, have performed. Mutual funds and closed-end investment companies also employ incentive fee arrangements, though their use is more limited. Indexation, or passive investing, is an investment strategy devoted to duplicating or matching the performance of a selected stock index, bond index or other financial index while minimizing management fees and transaction costs. Whether in connection with pension fund portfolios or mutual funds, the most common benchmark remains the Standard & Poor's 500 Composite Stock Price Index. Securities market indices assist the technical analyst in the attempt to study, observe and record the daily performance of individual securities and the market as a whole in order to predict future market trends.
