Blue-Chip Index

What is the 'Blue-Chip Index'

The blue-chip index is a stock index that tracks the shares of the top-performing publicly traded companies. Blue-chip stocks represent companies that are financially stable, well established and provide good returns for investors, making them desirable investments. Because blue-chip companies tend to perform similarly to the economy as a whole, the performance of a blue-chip index may be considered a gauge of an industry's or region's economic strength. It is for this reason that news reports typically mention how a major blue-chip stock index, such as the Dow Jones Industrial Average (DIJA), performed that day.

BREAKING DOWN 'Blue-Chip Index'

Rather than selecting individual stocks, an investor can gain exposure to a variety of blue-chip stocks by purchasing shares of an exchange-traded fund or index fund that tracks a blue-chip index. Besides the DJIA, other examples of blue-chip indexes include the NTX, which tracks 30 of the top stocks traded in central, eastern and southeastern Europe, and the DAX, which tracks the top 30 companies on the Frankfurt Stock Exchange.

RELATED TERMS
  1. Blue-Chip Stock

    A blue-chip stock is the stock of a large, well-established and ...
  2. Dow Jones Sustainability North ...

    A stock index that captures the top 20% of the largest 600 companies ...
  3. Conservative Investing

    An investing strategy that seeks to preserve an investment portfolio's ...
  4. Dow Jones Asian Titans 50 Index

    A market capitalization-weighted index of Asia-Pacific stocks ...
  5. Dow Jones EURO STOXX 50

    A market capitalization-weighted stock index of 50 large, blue-chip ...
  6. FTSE

    A company that specializes in index calculation. Although not ...
Related Articles
  1. Investing Basics

    What's a Blue-Chip Stock?

    A blue-chip stock is stock of a company that has been operating successfully for many years and has a market capitalization in the billions. Most blue-chip companies are leaders in their industry. ...
  2. Investing Basics

    The Pros and Cons of Indexes

    Learn about the advantages and disadvantages of stock indexes and passive index funds. Discover how there is an opportunity cost to using index funds.
  3. Mutual Funds & ETFs

    TRBCX: T. Rowe Price Blue Chip Growth Fund Performance Case Study

    Discover in which seasonal period the T.Rowe Price Blue Chip Growth Fund makes its best performance gains, and learn the factors that trigger this effect.
  4. Mutual Funds & ETFs

    ETF Tracking Errors: Protect Your Returns

    Tracking errors tend to be small, but they can still adversely affect your returns. Learn how to protect against them.
  5. Investing Basics

    An Introduction To Stock Market Indexes

    Investopedia explains the five most talked about indexes and what makes them all different.
  6. Investing Basics

    How to Pick A Stock

    The first step in picking stock is to determine your goals.
  7. Investing Basics

    What is an Index?

    An index is a statistical means of calculating a change in an economy or market.
  8. Investing

    What are Index Funds?

    An index fund is a type of mutual fund that is tied to a broad stock index like the S&P 500 or the Dow Jones Industrial Average, instead of being handpicked and managed by an investment manager. ...
  9. Stock Analysis

    In The Week Ahead: Chart Warns Blue Chips May Be Peaking

    The major U.S. stock indices posted their third negative weekly close on Friday. The benchmark S&P 500 ended the week 3.1% off its April 20 high, which came two days after I warned readers ...
  10. Stock Analysis

    3 Index Funds with the Lowest Expense Ratios

    Read detailed information about index mutual funds with some of the lowest expense ratios in their categories, and learn about their pros and cons.
RELATED FAQS
  1. What does it require for a company to become a blue-chip company?

    Learn how blue-chip companies have established prestige and solid reputations by remaining strong and adapting during difficult ... Read Answer >>
  2. What are the drawbacks of a small investor buying blue-chip stocks?

    Understand what a blue-chip stock is and learn about the drawbacks a small investor might face when investing in blue-chip ... Read Answer >>
  3. What qualifies a company as blue chip?

    Learn where the term blue-chip came from, what a blue-chip company is and what attributes a blue chip has that differentiates ... Read Answer >>
  4. What is the benefit of investing in blue chip stocks?

    Learn what blue-chip stocks are, what attributes blue-chip stocks have and how investors can benefit from an investment in ... Read Answer >>
  5. How do I determine what percentage of my portfolio to invest in blue chip stock?

    Learn how to determine what percentage of a portfolio should be invested in blue-chip stocks. Understand what strategy is ... Read Answer >>
  6. What are some index funds that specialize in blue chip stocks?

    Discover index funds that specialize in blue-chip stocks. Learn about what blue-chip stocks are and why they are desired ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center