SIGnet Investors’ Index®

What is the SIGnet Investors’ Index?

SIGnet members believe that investors should monitor the performance of their investment portfolios against a benchmark. By doing so you can determine whether your investment strategy is producing satisfactory results or whether you should reconsider and seek to improve it.

Having decided to benchmark your performance the next question is what to benchmark against? UK investors typically choose the FTSE100 or FTSE-All Share indices as benchmarks, but these indices suffer from a fatal flaw. They are market capitalisation weighted, which means that the index is heavily influenced by the performance of the largest companies (by market capitalisation). Typical UK investor portfolios are not weighted solely to the largest companies so these standard indices do not provide a very good benchmark for such portfolios.

SIGnet members (most recently Andrew Hall) have therefore devised an alternative index, designed to be more representative – the SIGnet Investors’ index (SII). This index is simply an  equally weighted index of ALL UK listed and quoted companies’ share prices. We believe that this index offers a more representative benchmark for UK investors to measure their performance against.

We recalculate the SII weekly, by aggregating the percentage share price moves of all its constituents. That means that, in effect it is reweighted weekly. The universe of stocks used includes investment trusts so there may be an element of double counting of some stocks that also happen to be significant constituents of one or more investment trusts. We decided to include investment trusts, as these are often constituents of members’ portfolios.

Note that the SII is NOT a total return index so if you use it to benchmark your own portfolio against you need to deduct gains from dividends you have received for a fair comparison. After some analysis, we concluded that dividends did not play a big role in performance differences between the SII and conventional indexes such as the FTSE100 or FTSE All-share. That analysis also showed that performance was not overly distorted by the inclusion of “penny stocks” (which are more susceptible to large price swings), as these form only 16% of  SII constituents.

Logged in SIGnet members can view and download the index by clicking the button below. If you are not yet a SIGnet member and would like to access our index, join here.

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