As I understand it these Indexes are baskets of assets that are securities. Does that make the Index itself a security? What about an index of commodities?

3 Answers 3


Index is not a security, index is a math formula. You can't buy an index.

There are funds that track the indexes and are trying to reproduce the asset mix that would be created by following the formula - shares in these are securities.

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    I think it's good to note that the funds that track those indices are pretty ubiquitous so if someone lazily says they're buying the S&P it's usually understood to mean they're buying one of those funds not that they don't know what they're talking about. Commented Dec 9, 2022 at 18:09
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    @DeanMacGregor yeah, but the funds don't replicate the indexes precisely, so usually you'll see some deviation between the movement of the index and the movement of a fund tracking the index. There's a reason for a wide variety of funds all tracking the same indexes.
    – littleadv
    Commented Dec 9, 2022 at 18:14
  • Sure, but that doesn't change the colloquialism in the least. Commented Dec 9, 2022 at 18:33
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    @bdsl: In principle, there is nothing preventing an institution from offering such a contract, but in practice, the only substantive difference between that security and the "regular" index funds would be in cases where the latter lags behind the market a tiny bit. To make up that difference, the institution has to assume some risk, which in practice means that the terms would likely be worse (e.g. higher fees), while the advantages are basically nonexistent, so I'm skeptical that any rational consumer would purchase it.
    – Kevin
    Commented Dec 11, 2022 at 0:25
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    @bdsl, that should be a separate question, but the answer is yes - synthetic ETFs exist that use derivatives to track the value of an index (without being physically backed by the same assets as the index represents), and also managed funds exist that are equivalent to particular ETFs but are accessed more like an account with the institution rather than traded.
    – benjimin
    Commented Dec 11, 2022 at 6:08

No, the indices are not securities. They are basically lists. The Dow Jones is a list of 30 companies, and the Standard & Poors 500 (as it says in the name) is a list of the 500 largest companies in the US. You can't invest in DJ or S&P 500 directly, since they are just lists, not securities.

There are several securities (index funds, ETFs) that track these indices by owning every equity on the list. They use different approaches to decide how much of each to own, which can affect performance. Investing in a fund like this will (usually) involve paying some fee to the fund manager. You could avoid that by investing in the underlying securities yourself (the companies on the lists), but that would involve a lot of management on your end, decisions about how to weight your holdings (and when and how to rebalance), and a lot of startup capital to buy all the necessary shares.

  • While there are lots of S&P index funds, there's only one fund that directly tracks the DJIA, and 2 other funds that are based on it, but are actively managed to either mitigate risk or increase returns.
    – Barmar
    Commented Dec 9, 2022 at 16:17
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    That's mostly due to DJIA being not a very useful index
    – littleadv
    Commented Dec 9, 2022 at 18:15
  • A list with factors (the weights of each security). Commented Dec 11, 2022 at 15:21

The S&P 500 and Dow Jones Industrial Average are not securities themselves, but rather they are indexes that track the performance of a group of securities. An index is a statistical measure of the performance of a group of securities, typically a stock market index such as the S&P 500 or Dow Jones Industrial Average. These indexes are created by companies such as Standard & Poor's and Dow Jones, and they use a specific methodology to select the securities that are included in the index and to calculate the index value.

An index of commodities, such as the Bloomberg Commodity Index, would work in a similar way, with the index tracking the performance of a group of commodity futures contracts. In this case, the individual futures contracts would be the securities, and the index itself would not be a security.

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