Question

Risk and performance of S&P 500 (USD) and EAFE index (Sg and USD)

Answer 1

                        S&P 500 Index – Standard & Poor's 500 Index

The S&P 500 or Standard & Poor's 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The index is widely regarded as the best gauge of large-cap U.S. equities. Other common U.S. stock market benchmarks include the Dow Jones Industrial Average or Dow 30 and the Russell 2000 Index, which represents the small-cap index.

The Standard & Poor’s 500 Index is a collection of stocks intended to reflect the overall return characteristics of the stock market as a whole. The stocks that make up the S&P 500 are selected by market capitalization, liquidity, and industry. Companies to be included in the S&P are selected by the S&P 500 Index Committee, which consists of a group of analysts employed by Standard & Poor's.

The S&P 500 Index or the Standard & Poor's 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The S&P is a float-weighted index, meaning company market capitalizations are adjusted by the number of shares available for public trading. The index is widely regarded as the best gauge of large-cap U.S. equities. As a result, there are many funds designed to track the performance of the S&P.

                                   EAFE Index

The EAFE Index is a stock index offered by MSCI that covers non-U.S. and Canadian equity markets. It serves as a performance benchmark for the major international equity markets as represented by 21 major MSCI indices from Europe, Australasia, and the Middle East.

The EAFE is a broad market index of stocks located within countries in Europe, Australasia, and the Middle East. Developed by Morgan Stanley Capital International (MSCI) in 1969, the EAFE Index contains more than 900 stocks from 21 countries. Investors and asset managers often use the EAFE Index as a performance benchmark for global developed market equities.

Institutional investors and asset managers use the EAFE index as a performance benchmark for the international developed equity market. By comparing the performance of funds to that of the EAFE Index, a manager can ascertain whether they are adding value to their clients' portfolios. Investors and portfolio managers who want an increased level of diversification beyond the U.S. and Canadian equity borders can include stocks from the EAFE in their portfolios. This can typically be done by purchasing index-linked financial products, such as exchange-traded funds (ETFs)

Just as the S&P 500 index represents the performance of small- to large-cap stocks in the U.S. markets, the EAFE Index was created to reflect the performance of small- to large-cap stocks across the developed regions of Europe, Australasia, and the Far East (EAFE). The index was developed by Morgan Stanley Capital International (MSCI) in 1969 and lists more than 900 stocks from 21 countries in the EAFE.