Security Market Indicator Series - SMIS

DEFINITION of 'Security Market Indicator Series - SMIS'

An index that uses the performance of a sampling of securities to represent the performance of a market segment or overall market. The security market indicator series assumes that the performance of a statistically valid set of securities will reflect the performance of a larger set of securities. Its purpose is to give investors a general idea of the way a larger segment of the market performs in aggregate.

BREAKING DOWN 'Security Market Indicator Series - SMIS'

Security market indicator series are often used in benchmarking. For example, an analyst may compare a security considered high growth to a sampling of similarly labeled securities to determine if the security performs better or worse than its peers.

SMIS may also be used in the creation of index funds, which are designed to follow the performance of a much larger market. Because the SMIS is an approximation for the performance of a larger segment, an index that follows the S&P 500, for example, will not have the same return as the overall S&P 500 index.

While SMIS can be used to determine the performance of a larger market segment, it can also be used to compare the performance of a money manager to the overall market performance. Because money managers charge fees, it is helpful for investors to determine whether those fees are warranted by performance. Ideally the money manager will outperform the market once fees are taken into account.

RELATED TERMS
  1. Business Segment Reporting

    Giving separate accounts of a company's individual divisions, ...
  2. Sampling

    A process used in statistical analysis in which a predetermined ...
  3. Segment

    A component of a business that is or will generate revenues and ...
  4. Performance Audit

    An audit performed on an asset manager by an outside accounting ...
  5. Asset Performance

    A business's ability to take productive resources and manage ...
  6. Hold

    An analyst's recommendation to neither buy nor sell a security. ...
Related Articles
  1. Mutual Funds & ETFs

    How Vanguard Index Funds Work

    Learn how Vanguard index funds work. See how the index sampling technique allows Vanguard to charge low expense ratios that can save investors money.
  2. Mutual Funds & ETFs

    Analyzing Mutual Funds For Maximum Return

    Using a few simple metrics will help you pick the right fund for your portfolio.
  3. Mutual Funds & ETFs

    Benchmark Your Returns With Indexes

    If your portfolio is always falling short, you may not be making an apples-to-apples comparison.
  4. Term

    How Market Segments Work

    A market segment is a group of people who share similar qualities.
  5. Investing Basics

    How to Evaluate Stock Performance

    Learn how to evaluate stock performance. While what you look for in a stock could be different from another person, the way you analyze performance is the same.
  6. Mutual Funds & ETFs

    Index Investing: What Is An Index?

    An index is a statistical measure of the changes in a portfolio of stocks representing a portion of the overall market. It would be too difficult to track every single security trading in the ...
  7. Mutual Funds & ETFs

    Choose A Fund With A Winning Manager

    We break down the key components of analyzing a fund manager's performance so you can find a winner.
  8. Investing Basics

    Signs You Need A Money Manager Now

    A money manager can provide the guidance necessary to secure financial freedom, but it’s not always clear when you need one. Here's how to decide.
  9. Mutual Funds & ETFs

    Create Your Own U.S. Equity Portfolio

    Find out how to structure your portfolio so you can maximize returns.
  10. Investing Basics

    What's a Benchmark?

    A benchmark is a standard investors choose to gauge the performance of their portfolios.
RELATED FAQS
  1. 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 >>
  2. What percentage of the population do you need in a representative sample?

    Learn about representative samples and how they are used in conjunction with other strategies to create useful data with ... Read Answer >>
  3. What's the difference between a representative sample and a random sample?

    Explore the differences between representative samples and random samples, and discover how they are often used in tandem ... Read Answer >>
  4. What is the average annual return for the S&P 500?

    See the historical performance of the S&P 500 Index, and examine a number of factors that affect an investor's actual return ... Read Answer >>
  5. 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 >>
  6. What's the difference between a representative sample and a convenience sample?

    Learn the difference between convenience sampling and representative sampling and the advantages and disadvantages of each ... Read Answer >>
Hot Definitions
  1. 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, ...
  2. 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.
  3. 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 ...
  4. 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 ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center