Definition

1. Noun:
   • An index fund is a type of mutual fund or exchange-traded fund (ETF) designed to track the performance of a specific financial market index, such as the S&P 500. It does this by holding all, or a representative sample, of the securities in that index.

Usage

• Noun:
  • An index fund provides broad market exposure with low operating expenses.
  • Many investors choose an index fund for their retirement portfolio because of its passive management strategy.

Advanced Usage

• "to invest in an index fund": to allocate money into this type of fund.
  • She decided to invest in an index fund that tracks the total stock market.
• "passively managed index fund": emphasizes that the fund's holdings are automatically determined by the index it follows, not by active stock selection by a fund manager.
  • The low fees are a key advantage of a passively managed index fund.

Variants and Related Words

• Indexing (n): The investment strategy of constructing a portfolio to match the components of a market index.
• Index ETF (n): An Exchange-Traded Fund that tracks an index, similar to an index mutual fund but traded on a stock exchange throughout the day.

Synonyms

• Tracker fund: A fund that tracks an index (common in British English).
• Passive fund: A fund that follows a passive investment strategy by replicating an index.

Related Phrases

• Market-cap weighted index fund: A specific type of index fund where each holding's weight in the fund is proportional to its total market value.
  • Most major index funds are market-cap weighted.

Noun

1. a mutual fund that invests in the stocks that are the basis of a well-known stock or bond index
2. a mutual fund whose assets are stocks on a given list