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.

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