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Indexes and index funds

What the DAX, MSCI World and S&P 500 really are, how they are built, and how index funds follow them, at what cost.

  • 8 lessons
  • 56 min
  • Free
  • A certificate when you finish

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Who it is for

For anyone who keeps hearing about index funds and ETFs, and wants to know what is inside them and what they cost before buying one.

The lessons

Each lesson has a short video, a quiz and links to learn more. The full lessons open after a free sign-in.

  1. Lesson 1: What an index is

    7 min

    An index is a basket of companies summed up in one number. Why the evening news quotes them, and what a 1% move really means.

    Key points

    • An index tracks the value of a chosen basket of shares or bonds.
    • It starts from a base value (the BEL 20 started at 1,000 at the end of 1990) and moves with its members.
    • An index is a measure, not something you buy; funds copy it.

  2. Lesson 2: How an index is built

    7 min

    Selection rules, weighting by size, caps and regular reviews. Why the biggest companies count most.

    Key points

    • Most indexes weight companies by the value of their freely traded shares (free-float market value).
    • Caps stop one company from dominating; each index has its own cap rule, written in its rulebook.
    • Members are reviewed on fixed dates: growing companies come in, shrinking ones drop out.

  3. Lesson 3: Price index or total return: the dividend trap

    7 min

    Most indexes quoted on the news leave dividends out; the DAX puts them back in. Why that matters when you compare markets or judge a fund.

    Key points

    • A price index shows only price moves; a total-return index also counts dividends, reinvested.
    • The DAX is quoted as a total-return index; the CAC 40, BEL 20, AEX, SMI and Euro Stoxx 50 are quoted as price indexes (provider factsheets).
    • Compare like with like: over decades, reinvested dividends make a large difference.

  4. Lesson 4: The world's big indexes: S&P 500 and MSCI World

    7 min

    What's inside the two indexes most index funds follow, and why "world" today mostly means America.

    Key points

    • The S&P 500 holds about 500 large US companies; the MSCI World held 1,249 large and mid-sized companies from 23 developed countries (MSCI factsheet, 30 September 2026).
    • The US made up about 73% of the MSCI World, and its ten largest companies about 28% (same factsheet).
    • Emerging markets such as China and India sit in separate indexes, such as MSCI Emerging Markets or MSCI ACWI.

  5. Lesson 5: Europe's indexes: Euro Stoxx 50, DAX and CAC 40

    7 min

    The big indexes for the euro area, Germany and France: what's in them, how they changed, and what they leave out.

    Key points

    • The Euro Stoxx 50 holds 50 large euro-area companies; the Stoxx Europe 600 covers 600 across Europe.
    • The DAX grew from 30 to 40 companies in September 2021; the CAC 40 holds 40 large French companies.
    • Large-company indexes leave out the small and mid-sized firms that make up much of the economy.

  6. Lesson 6: Home indexes: BEL 20, AEX and SMI

    7 min

    Belgium's, the Netherlands' and Switzerland's indexes are small and concentrated. Why your home index is a narrow window on the world.

    Key points

    • The BEL 20 holds 20 Belgian companies, the AEX 30 Dutch ones since September 2025, and the SMI the 20 largest Swiss ones.
    • In small indexes a few companies weigh a lot, so one company's bad year moves the whole index.
    • Many people hold too much of their home market ("home bias"); the world is far bigger than one country.

  7. Lesson 7: Index funds and ETFs: how they follow an index

    7 min

    How a fund copies an index, what it costs, why most active funds trailed their index over ten years, and how to read the key information document.

    Key points

    • Index funds and ETFs copy an index by holding the shares or through a swap; check which.
    • Look at the yearly running cost and how closely the fund followed its index; over the ten years to June 2026, more than nine in ten active equity funds in the main euro categories trailed their benchmark (S&P SPIVA Europe).
    • Accumulating funds reinvest dividends, distributing funds pay them out, and tax treatment differs by country.

  8. Lesson 8: Sustainable and themed indexes

    7 min

    ESG, climate and theme indexes: what the labels mean in EU law, what they leave out, and why fashionable themes often disappoint.

    Key points

    • ESG indexes drop or reweight companies by environmental, social and governance scores, and scores differ between providers.
    • EU law defines "Paris-aligned" and "climate transition" benchmarks, and fund names with ESG words must meet ESMA rules.
    • Theme funds are narrow bets that often launch after a theme has already risen (NBER study, 2021).

What’s inside

  • Short videos: About two minutes for each lesson
  • Quizzes: Three questions after each lesson
  • Calculators: Inflation, compound interest, an emergency fund and fees
  • Certificate: For every course you complete

The full lessons, videos and quizzes open after a free sign-in: your name, email, mobile number and a PIN. No card, no obligation.

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General financial education. Hallycon Academy does not manage money, sell investment products or give personal advice. Examples in the lessons promise no return.

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