Performance-Based Index

DEFINITION of 'Performance-Based Index'

A stock index that includes all dividends and other cash events paid out to shareholders. When measuring the performance over a given time period, the performance-based index will add in any dividend amounts to the net share price before calculating the index return.

BREAKING DOWN 'Performance-Based Index'

The DAX, a benchmark stock index of 30 blue chip German companies, is a performance-based index, as are many of those based on European equities. The performance of the benchmark Standard & Poor's 500 Index is usually presented with company dividends included, but can be shown with and without. When examining the total return of index funds, investors may see that not only are dividends included, but also capital gains, a factor not present in the non-traded indexes themselves.

RELATED TERMS
  1. Total Return Index

    A type of equity index that tracks both the capital gains of ...
  2. Index Investing

    A form of passive investing that aims to generate the same rate ...
  3. Dividend

    A distribution of a portion of a company's earnings, decided ...
  4. Price-Weighted Index

    A stock index in which each stock influences the index in proportion ...
  5. Yield Tilt Index Fund

    A type of mutual fund that allocates capital as a standard index, ...
  6. Index Fund

    An index fund is a type of mutual fund with a portfolio constructed ...
Related Articles
  1. Mutual Funds & ETFs

    The 4 Best Indexes for Dividends

    Learn about some of the biggest dividend indexes in the marketplace and which niche of the dividend universe each of these indexes targets.
  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. Investing Basics

    What is an Index?

    An index is a statistical means of calculating a change in an economy or market.
  4. Professionals

    Average Market Returns

    We look at the major indexes and their average yearly returns.
  5. Options & Futures

    Using Index Futures To Predict The Future

    Want to know whether the stock market will open up or down? Check out the index futures.
  6. Investing Basics

    The Importance of Dividends in Your Portfolio

    Learn some of the primary reasons why dividends constitute a critical factor in the overall performance of a stock investor's portfolio.
  7. Mutual Funds & ETFs

    Index Investing: Other Indexes

    We've covered most of the big U.S. indexes, but we've barely scratched the surface of all the other indexes in the world. There are literally thousands of indexes tracking nearly any market. ...
  8. Mutual Funds & ETFs

    Measuring Performance

    Measuring Performance
  9. Investing

    The 3 Biggest Misconceptions of Dividend Stocks

    To find the best dividend stocks, focus on total return, not yield.
  10. 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.
RELATED FAQS
  1. Which is better a cash dividend or a stock dividend?

    The purpose of dividends is to return wealth back to the shareholders of a company. There are two main types of dividends: ... Read Answer >>
  2. Is it possible to invest in an index?

    First, let's review the definition of an index. An index is essentially an imaginary portfolio of securities representing ... Read Answer >>
  3. What is the difference between yield and dividend?

    Learn how to differentiate between dividend yield and dividend return, and see why dividend yield is the more popular rate ... Read Answer >>
  4. What are the pros and cons of using the S&P 500 as a benchmark?

    Learn about the advantages and disadvantages of using the S&P 500 as a benchmark for portfolio performance, and understand ... Read Answer >>
  5. Can I receive dividends on ordinary shares of a company?

    Understand the basics of collecting dividend payments on ordinary shares, including when dividends can be paid and under ... Read Answer >>
  6. Are dividends considered an asset?

    Find out why dividends are considered an asset for investors but a liability for the company that issued the stock, and learn ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center