Indices and Benchmarks
An index is a measure of the changes in a group of stocks or bonds representing a portion of the overall market. It can be used to give an investor a point of reference or benchmark as to how a particular market is performing.
If a Canadian investor holds a diversified portfolio, it will typically be allocated between cash, bonds and equities depending upon their risk profile and goals.If you hold a mutual fund or Exchange Traded Fund (ETF), it will list what index it uses as as its benchmark.Some common indice sare as follows.
5. MSCI EAFE (pronounced “eef’ ah”) is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. & Canada (EAFE stands for Europe, Australasia and the Far East. Below is a graph of the EAFE ETF. Ticker symbol EFA.
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