The premier stock index in Canada is the S&P/TSX 60 Index*, while south of the border, the American markets arguably have three premier indices: the Dow Jones Industrial Average, the S&P 500Ⓡ, and the Nasdaq-100.

Index Overviews

All four major North American stock indices are designed to perform the same task: tracking the performance of the largest companies listed on one or more exchanges. Here is a quick look at the four indices:

• The S&P/TSX 60 Index tracks the performance of 60 large cap companies listed on a Canadian exchange.

• The Dow Jones Industrial Average tracks the performance of 30 diversified large cap companies listed on either the NYSE or the Nasdaq exchange.

• The S&P 500 Index tracks the performance of 500 large cap U.S.-listed companies.

• The Nasdaq-100 Index tracks the performance of 100 large cap companies listed exclusively on the Nasdaq exchange.

Companies listed on a Canadian exchange can be included in an American index, as is the case with gold miner Newmont Corporation.

Canadian Stock Index

Global investors have many reasons to be interested in investing in the ETF that tracks the S&P/TSX 60 Index. Most notably, the Canadian index includes exposure to a combination of multinational behemoths and domestic-focused companies.

For example, Shopify helps e-commerce stores worldwide with their online businesses, and Rogers Communications is a telecommunications giant that benefits from a very favourable protectionist environment in Canada.

The largest Canadian companies do not benefit from the same glamour and media attention as American companies do. However, the companies included in the Canadian index are industry giants in their own right, and they provide investors exposure to various markets and strong growth opportunities that are backed by one of the world’s strongest middle classes.

The Case for American Indices

Investors across the world may want exposure to one or more of the American stock indices through an ETF because it includes some of the world’s greatest corporate success stories. Apple, for example, pioneered and revolutionized the global music and smartphone industries, while Amazon changed the way we shop, no matter where we live in the world.

Each of the three major indices is designed to fulfill a slightly different role in an investor’s portfolio. The Dow Jones, for example, does not include the largest companies - rather it is more diversified across multiple sectors. The S&P 500 Index is considered more diversified, as it includes hundreds of companies.

Lastly, the Nasdaq-100 index is strictly tech-focused and offers no diversification outside of the technology industry.

Canada vs. USA: Is There a Winner?

Comparing the four indices is a useful exercise for determining which one showed the highest levels of growth over one year and five years. Here is how each index performed (as of November 19):

• S&P/TSX 60 Index: Up 29% over one year, up 48% over five years.

• S&P 500 Index: Up 29% over one year, up 115% over five years.

• Dow Jones Industrial Average: Up 20% over one year, up 90% over five years.

• Nasdaq-100 Index: Up 36% over one year, up 240% over five years.

Conclusion: We Have a Winner - of Sorts

Based solely on past performance over a five-year period, the tech-dominated Nasdaq-100 index has proven to be the superior index. But as always, one must remember that past performance is never a guarantee of future results.

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* The S&P/TSX 60 Index (in this paragraph, the “Index”) is the product of S&P Dow Jones Indices LLC or its affiliates ("SPDJI") and TSX Inc. ("TSX"). Standard & Poor's® and S&P® are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and TSX® is a registered trademark of TSX. SPDJI, Dow Jones, S&P, their respective affiliates and TSX do not sponsor, endorse, sell or promote any products based on the Index and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions or interruptions of the Index or any data related thereto.