Index Definition

Index investors generally create portfolios that are designed to match the composition of one or more of the broad-based indices such as the S&P 500, the Russell 1000/2000/3000, the Wilshire 5000, or the Nasdaq 100. Therefore, the performance and risk of the portfolio mirrors a section of the broader market. Their investment decisions are driven solely by the makeup of the index that is tracked rather than by an evaluation of the company and its business prospects. As a result, Index firms are often referred to as "passive" investors. Thomson Reuters categorizes these portfolios based on its specific knowledge of their historical investment behavior.