What is S & P 500?

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S & P® 500 is a group of 500 stocks of large caps monitored by Standard & Poor's, a financial information company. This index is commonly used as a scale for the overall performance of the stock market. Investors use this index to measure the results of their individual portfolios. The S & P® 500 may also apply to 500 companies that make up the index.

Standard & Poor's has a long history of stock market monitoring and economic performance. The S & P® 500 predecessor, the S & P® 90, began in 1923. The S & P® 500 was established in 1957. The current index includes supplies from different sectors. These sectors are energy, materials, industrial products, consumer discrete, consumer staples, health care, financial, information technology, telecommunications and public services. Maintaining the right mix between these sectors ensures that the index precisely represents the market market and the overall economy.RS are weighed or have a share in the index to match their importance in the economyThe United States. The S & P® 500 is an index weighted to market value. This means that each stock is weighed according to the market value of all its outstanding shares. Only companies that meet the list of criteria are entitled to inclusion in the index. The company must be a real operating company based in the United States. Closed confidence, partnership, holding companies and investment vehicles cannot be included in the index.

Other criteria include the market limit of more than $ 3 billion in the US (USD), corresponding to liquidity and a competitive stock price. In addition, the company's shares must have at least 50% a public float . Public float is a number of shares of traded public. Thspiery must also be a proven leader in his business sector.

Index committee members are constantly checking shares in the index. The aim of the Committee is to ensure that selected shares precisely represent the status of the marketu with the stocks of the United States. Companies that experience serious and continuing financial difficulties, or do not meet the requirements for eligibility, can be removed from the S & P® 500. When the supply is removed from the index, it is replaced by a new one.

Investors cannot buy the index shares. Several financial institutions have created mutual funds that include only index shares. Buy a purchase of shares of these mutual funds, investors can correspond to the performance of S & P® 500.