3.

Unweighted series: In this index, all stocks carry equal weighting regardless of their prices and/or market values. In other words, a RM20 stock is just as important as a RM2 stock in this portfolio. Such an index would be useful for investors who randomly select stocks for their portfolios and invest the same dollar amount in each stock.

It is important to understand how indices are constructed and what they represent. Although most indices would give investors a “feel” of how the overall market is performing, selecting an appropriate index against which you can compare your investment portfolio performance would require greater consideration. For example, if an investor invests in a small cap unit trust fund, it would be inappropriate to compare its performance against the KLCI (which consists mainly of large cap stocks).

For updates on the various Malaysian stock market indices, go to: www.klse.com.my.