A measure of the performance of a group of investments. Indices can be calculated on an equal weighted basis (taking the performance of each investment and multiplying it by one, divided by the number of investments, then adding together all of the results) or on a weighted average basis (usually done by taking the performance of each investment and multiplying it by the total value of the investment, divided by the total value of all the investments in the index, then adding together all of the results). Most indices are calculated on a weighted average basis.
Indices are often used by Investment Managers as Benchmarks and by investors to compare performance.