Additionally, some ETF investors may have noticed that their ETFs track a “spliced index” where the performance is based on two or more indices that have been meshed together to provide extended historical data. A company could decide that a newer index does not have enough historical data, so an older but similar index may be included. On the other hand, an ETF may have switched its underlying index, showing historical data from two different indices. For example, Vanguard recently swapped out MSCI indices on a group of its ETFs for CRSP and FTSE indices. [What Vanguard Index Swap Means For Investors]
Lastly, a “composite” index represents a broad group of securities placed under one roof, mainly those listed on a specific exchange. For instance, the widely viewed Nasdaq Composite Index follows stocks listed on the Nasdaq, and the NYSE Composite Index tracks securities listed on the New York Stock Exchange.
For more information on ETF indices, visit our indexing category.
Max Chen contributed to this article.