Market Basket

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DEFINITION of 'Market Basket'

A subset of products or securities that is designed to mimic the performance of an overall market. Market baskets contain a fixed selection of items, which are used to track such things as inflation, prices or performance levels.

BREAKING DOWN 'Market Basket'

For investors, the market basket is the principal idea behind index funds. A sample of stocks, bonds or other securities are placed in a portfolio that is expected to represent all aspects of the market. This provides investors with a benchmark against which to compare their investment returns.

Another popular market basket relates to the Consumer Price Index (CPI), which tracks a variety of consumer goods. The CPI looks at the price levels of consumer products and provides an estimate for inflation.

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