Sounds simple, doesn’t it? You can read the detailed explanation again here:

You can imagine an index  An index is a basket of various securities selected according to particular criteria. It reflects the performance of this selection’s prices and documents them. An index also serves as a comparative value. as a kind of barometer that illustrates the performance of securities from different companies. The best-known Swiss index, the SMI, represents the shares in Switzerland’s largest 20 companies. However, as well as shares  A share is a security which gives investors a stake in a company. Companies raise capital by issuing shares. Shareholders have proprietary rights (e.g. entitlement to dividends) and membership rights (e.g. entitlement to take part in the general meeting and the right to vote)., there are also indexes for a wide range of different investments – raw materials, bonds  A bond is a security that generates interest for investors. In addition to entitlement to payment of the agreed interest, bond holders – the creditors – also have the right to repayment of their capital. A government bond is issued by a state. The state, the Swiss Confederation for example, is the issuer of the bond and therefore also the debtor. and real estate, for instance. An index replicates part of a market and shows how it is performing. Indices are very suitable as a means of comparison, for example if you want to compare stock market trends in individual countries.

A distinction is generally made between two different types of index – price and performance indexes. These either show the prices of various shares alone (price index) or also take into account the related dividend payments (performance index).

You can read more about share indexes in our article “What is a share index?” If you’d like to find out more about the SMI, our article “How is the SMI made up?” contains further fascinating information.