Here’s how the ASX 200 compares to other global indices // Motley Fool Australia

Walking hand in hand with almost every country with a stock exchange is an accompanying index. An index is how investors can rank companies on stock exchanges according to their size. Indices are very useful for gauging the overall performance of the share market, as opposed to the individual shares that they consist of. In recent years, this has gained a new level of importance given the rise of index exchange-traded funds (ETFs) that have become one of the most popular avenues for investing in shares.

So in Australia, our stock exchange is typically represented by the S&P/ASX 200 Index (ASX: XJO), which holds 200 of the largest companies listed on the ASX. The ASX 200 ranks these 200 shares by market capitalisation, so the…