A Market Index is a hypothetical portfolio of investment holdings that represents a segment of the financial market. The calculation of the index value comes from the prices of the underlying holdings. Some indexes have values based on market-cap weighting, revenue-weighting, float-weighting, and fundamental-weighting. Weighting is a method of adjusting the individual impact of items in an index.There are many different types of indexes out there, each with their own strengths and weaknesses.For example, some investors might prefer an index that is weighted by market capitalization because it gives them a better sense for how large companies are performing relative to smaller companies. Others might prefer an equal-weighted or revenue-weighted index because they believe that all companies should be given equal consideration regardless of size or profitability.
