Indices

The S&P 500 index was introduced on March 4th, 1957 as a benchmark in measuring the performance of the U.S. stock market. Since its inception, the S&P 500 has become the world’s most widely followed measure of the U.S. markets.

In its 50 years, the S&P 500 has become the basis for the most widely used U.S. index-linked futures, options and Exchanged Traded Funds (ETFs). It has led to the creation of the S&P MidCap 400, S&P SmallCap 600 and the S&P Composite 1500. The S&P 500 has become the performance benchmark of choice for institutional investment managers, mutual funds and professional financial advisors. And, the index is a popular tool for implementing indexing strategies, where money managers seek to replicate the performance of the index. Today, nearly US$ 4.5 trillion is benchmarked to the S&P 500, of which nearly US$ 1.5 trillion is directly invested in the index. This is more than any other single index.

The S&P 500 is a market-value weighted index – each stock’s weight in the index is proportionate to its market value. S&P Indices are calculated using a base-weighted aggregate methodology, meaning the level of the index reflects the total market value of all component stocks relative to a particular base period. Total market value is determined by multiplying the price of the stock by the number of shares outstanding.