Index Investing - The Core of Your Investment Program

Index investing provides significant benefits and has become a core strategy for many Canadian investors. But no one can predict the market and it may be prudent to consider exposure to different investment styles as well. This in part reflects the great flexibility of index investing: it can be used as a stand-alone strategy or in combination with other styles of investing.

There are many ways to invest and many different investment styles out there. But remember, all investment performance is ultimately measured against the index benchmarks. Index investing also makes life simpler for you. Monitoring your investment is easy since your portfolio tracks the market index itself.

Index Funds Track the Major Index Benchmarks

Index investing revolves around market indexes, benchmarks that reflect the performance of the leading capital markets. The most widely followed indexes in Canada are:

• Scotia Capital Markets 91 Day T-Bill Index for the Canadian money market.
• Scotia Capital Markets Universe Bond Index for the Canadian bond market.
• TSE 300 Composite Index for the Canadian stock market.
• S&P 500 Index for the U.S. stock market.
• Morgan Stanley Capital International Europe, Australasia and Far East (EAFE) Index for major global stock markets.

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