This module is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.
Lesson 7 of 8 · 11 min
Types of equity indexes
Equity indexes come as broad market, multi-market, sector and style indexes; each slices the stock market a different way, and the slicing rules differ between providers.
In short
- A broad market index represents a whole equity market, typically covering more than 90% of it.
- Multi-market indexes combine several countries or regions, grouped by geography and level of economic development (developed, emerging, frontier); markets are reclassified over time.
- Some multi-market indexes cap-weight stocks within each country but weight countries by GDP: a form of fundamental weighting.
- Sector indexes come in families whose sum is roughly a broad index; they help separate stock selection from sector allocation skill. No universal sector classification exists.
- Style indexes group stocks by size (large, mid, small) and value/growth. Definitions differ across providers, and stocks migrate between styles, so style indexes have higher turnover than broad indexes.
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