What is a stock index?
A stock index is one number that shows how a whole group of stocks is doing at once. The S&P 500 covers the 500 largest US companies, the C25 the 25 most traded Danish stocks, MSCI World around 1,500 large companies in 23 developed countries. If the index rises 1%, the group as a whole has risen 1%. The index is just a list with rules — you cannot buy it directly, but an index fund can follow it for you.
Each tile is a stock. The big companies take up most of the index.
How it is calculated
Most indices weight by market cap: the bigger the company, the more it counts. In the S&P 500, Apple and Microsoft therefore weigh many times more than the smallest company on the list. That means the index can rise even when most stocks in it fall — as long as the biggest ones rise.
Example with three stocks: A is 60% of the index, B 30%, C 10%. If A rises 2% and B and C fall 1%, the index has risen 0.6 × 2 − 0.3 × 1 − 0.1 × 1 = +0.8%. Two out of three fell — the index rose.
Price index or total return
A price index counts only price movements. A total return index also counts dividends, as if reinvested. The difference is large over time — typically 1.5–2 percentage points a year. When you compare a fund with its index, make sure it is the same kind. Otherwise the fund looks worse than it is.
The indices you meet most
- S&P 500: 500 large US companies. The most followed in the world.
- Nasdaq 100: 100 large companies on the Nasdaq exchange — mostly technology.
- MSCI World: about 1,500 companies in 23 developed countries. Around 70% are American.
- MSCI ACWI: Like World, plus emerging markets such as China and India.
- STOXX Europe 600: 600 European companies.
- C25 (OMXC25): 25 Danish stocks. Very heavy in pharmaceuticals and shipping.
The typical beginner's mistake
Believing "the market rose 1%" means your stock rose. The index is an average weighted by size. Your individual stock may well have fallen that day.
How you see it in Kiggo
Kiggo's heat map shows a whole index — say the largest US stocks or the C25 — as tiles where size is the company's weight and colour is the day's move. So you see at a glance why the index did what it did. Look up an index fund and it says clearly which index it follows.
Related terms
Frequently asked questions
Can I buy the S&P 500?
Not directly — an index is a list, not a security. But you can buy an index fund or ETF that owns the 500 stocks in the same proportions. Then you follow the index minus the fund's costs.
What does market-cap weighted mean?
That each company counts in proportion to what it is worth on the exchange. The largest companies weigh most. The alternative is equal weighting, where all count the same — that is rarer.
How often are the stocks in an index replaced?
Usually at fixed reviews a few times a year. If a company grows into the top 25, it joins the C25; if another shrinks, it drops out. Index funds buy and sell accordingly.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-23.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
