Major Global Indices: An Educational Overview

Indices are often described as "major" based on factors such as the size and economic significance of the companies included, the size of the underlying market or exchange, and how widely the index is followed by global market participants and media. Major indices often represent some of the largest, most established companies within a given country or region.

Major indices exist across different regions, often representing the largest exchanges or economies in North America, Europe, and Asia-Pacific, among other regions. Each of these indices has its own specific composition, selection criteria and weighting methodology, meaning they are not directly comparable in a simple, like-for-like way, despite all being broadly described as "major."

Different major indices can have very different sector compositions depending on the underlying economy they represent. For example, an index heavily weighted toward technology companies will behave differently from one more heavily weighted toward financial or energy companies, particularly during periods when those specific sectors are experiencing notable developments.

This connects to the next lesson in this unit on sector weighting, which explains this concept in more depth.