Stock market indices are widely known as benchmarks whose values are reported on TV, newspapers, and fund fact sheets, and whose returns most professional managers have not been able to consistently beat. In many asset classes, there is at least one index meant to track what an average investment would make or lose over time investing in that asset class. This chapter introduces some of the major types of investment benchmark indices, mostly focusing on stock indices, and describes their role in both passive and active portfolio management.
