An index is a group of securities chosen to track a particular investment theme such as a market, asset class, sector, industry, or even strategy. Generally the goal is to accurately represent the risk/return profile of that theme without necessarily holding every security that might qualify.

The exact compilation of securities in an index is known as its basket, while the proportion of the index each individual security comprises is its weighting. An index’s value is a single number that, when referenced to a starting value, describes how the index has performed over time.