SP 500 Index

The SP 500 Index is a well known and followed equity index representing 500 leading large-sized US companies in various key industries. The SP 500 Index goes back to the early 1920's but officially included 500 companies in 1957. The SP 500 Index represents over 75% of the entire U.S. equity market so it is considered a benchmark for the entire US market. The SP 500 Index is weighted by market capitalization. The SP 500 Index includes large cap stocks with market capitalization above US$5 billion dollars. To be included in the SP 500 Index, a company must be a US company with strong financials (i.e. as reported earnings must be positive for 4 quarters in a row). An SP 500 Index company must have good liquidity. An SP 500 Index company must also be an operating type of company (i.e. no holding companies for example but REITs are allowed). The SP 500 index is calculated by Standard and Poor's in accordance with published specifications. The SP 500 Index is reconstituted on an as needed basis by SP economists and index experts, members of the SP Index Committee. The SP 500 Index is part of the SP Global 1200 Index. Various Exchange traded Funds (ETF), futures, options, and mutual funds offer investment vehicles to trade the SP 500 Index.

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