Price-Weighted Index Definition

Jan 16, 2024

Reviewed by: etf.com Staff

Edited by: etf.com Staff

Learn more about Price-Weighted Index

A Price-Weighted Index in ETFs operates by assigning weights to its components based on their individual stock prices. Unlike market-capitalization-weighted indices, where larger companies have more influence, price-weighted indices give higher importance to stocks with higher prices. ETFs tracking price-weighted indices offer investors an alternative perspective on market representation, potentially leading to different investment outcomes. This unique methodology provides a distinctive lens through which investors can gauge market movements, encouraging a diversified approach to index tracking within the multifaceted landscape of exchange-traded funds.

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ETF Glossary

ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.

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