Price-Weighted Index Definition
Learn the definition of price-weighted index and other ETF terminology from the etf.com glossary.
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.
