What Is Index Fund? Meaning & Example
Definition
An index fund aims to match the performance of a market index by holding the same securities. It is typically low cost and widely used for passive investing.
Related terms
An ETF is a fund that holds a basket of assets and trades on an exchange like a stock. Many ETFs track an index and offer low-cost diversification.
Market IndexA market index tracks the performance of a selected group of securities to represent part of the market. Indexes are used as benchmarks and as the basis for index funds.
Passive InvestingPassive investing aims to match market returns by holding broad, low-cost funds rather than picking individual winners. It involves little trading and low fees.
What is Index Fund?
An index fund aims to match the performance of a market index by holding the same securities. It is typically low cost and widely used for passive investing.
Can you give an example of Index Fund?
A total market index fund holds thousands of stocks so its returns mirror the overall market.