Proper Use Of Custom Index Can Be The Option To Offer Great Benefits To

Investing An index is a statistical measure of change in an economy. While in the case of financial markets, it is described as an imaginary portfolio of securities representing a particular market. A Custom index is an index that specially customizes for their clients. The job of an index provider is to calculate, analyze and determine the indexes that were being used at past and how they are effecting and depending on all these factors they plan out and chalk out new indexes for their clients. The indexes providers also provide new methods that can help bring changes in the existing indexes. The different definitions for Indexes: Index Count: It is the count in an indexes which for a time period is the number of securities present in that particular portfolio. The rules of indexes count are based on particular indexes and portfolio methodology. The portfolio methodology generally consists of two kinds of analysis that is Risk Attribution analysis and Performance Analysis. In.e Return: The return on the ordinary dividends of a security paid to their share holders are known as in.e return. It is basically the ratio of the amount of ordinary dividends calculated from the end of the previous period to the end of the period of interest to the price at the end of previous period. It is basically similar to the dividend yield. Index Level: The value of an investment which is relative to its value at one particular time is known as index level. It is one convenient method which helps in .paring relative performance of various portfolios of asset classes. The differences that arrive are because the indexes are based on different underline databases. Index Weight: The total value of securities which is present at the end of the previous trading period, for a particular time period in the index is known as the Index Weight. Index Fund: It is a fund that helps in duplicating the performance of a stock market index or bond market index that it tracks. Reasons why Index Fund should be considered a part of every portfolio: It is tax efficient by nature: One can have much lower capital tax gains as the stock turnover is less. Enhanced Performance: It helps in enhancing the performance as most of the non-index funds do not seem to properly perform their specific index. Less Stress: It provides one less stress as it is usually easy to work with and controllable. It is also easier to check the performance. Easier fixation of asset location: While finishing the financial check up if someone falls short of small cap value stocks, then the remedial process is very easy. One needs to find an index fund of small cap value stocks assuming all the other characteristics meet their standards. Low fees and expenses: Due to the passive management of index funds the charges are generally lower and thus results in some of the low expense ratios in the mutual fund market. 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