Blue-Chip Index

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DEFINITION of 'Blue-Chip Index'

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.

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RELATED FAQS
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    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  2. What is the difference between shares outstanding and floating stock?

    Shares outstanding and floating stock are different measures of the shares of a particular stock. Shares outstanding is the ... Read Full Answer >>
  3. What are the drawbacks of a small investor buying blue-chip stocks?

    Blue-chip stocks are generally safer for investors. However, their drawbacks for small investors include moderate growth ... Read Full Answer >>
  4. What is the difference between market risk premium and equity risk premium?

    The only meaningful difference between market-risk premium and equity-risk premium is scope. Both terms refer to the same ... Read Full Answer >>
  5. What is the difference between the QQQ ETF and other indexes?

    QQQ, previously QQQQ, is unlike indexes because it is an exchange-traded fund (ETF) that tracks the Nasdaq 100 Index. The ... Read Full Answer >>
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