8. The US market

■ The S&P 500 is the major one and is a value weighted index which comprises the prices of 500 large-cap liquid stocks actively traded in the US. Companies that comprise the S&P 500 trade on either the New York Stock Exchange or the Nasdaq.

■ The Dow Jones Industrial Average which is a price-weighted average of blue-chip stocks and the oldest index by far. The index covers all industries with the exception of transportation stocks and utilities – they have their own specific indices. The DJ index has been a widely followed indicator of the stock market since 1 October 1928, but it’s much narrower than the S&P 500 and comprises just 30 mammoth companies.

■ You might also see another major index used called the Russell 1000 Index which measures the performance of the large-cap segment of the US equity universe. According to ETF Securities, which has an index fund that tracks this index, the 1000 represents approximately 92 per cent of the US equity market compared with only 66 per cent for the S&P 500

■ THE MSCI USA Index. This is based around the hugely popular MSCI World Developed markets index and covers almost 98 per cent of all the stocks – large and small – listed on the US stock markets (including the Nasdaq and the NYSE).

So, which index to use? Given this huge range, I'd suggest sticking with perhaps the best known of the large-cap indices, namely the S&P 500 index – it's very diversified compared with our own FTSE 100 and contains some of the world's strongest companies. It's also easy to track, and the underlying shares are liquid and easy to access.

Tracking the US market via ETFs