GlossaryReference
Index Fund
A fund that tracks a market index, aiming to match its performance at low cost.
What Index Fund means
An index fund is an investment fund built to mirror a market index, like the S&P 500 or the FTSE 100. Instead of trying to beat the market with stock-picking, it simply aims to match the index's returns, which usually comes with much lower fees. Because they hold many companies, index funds are automatically diversified. They are a staple of low-cost, long-term investing.
Example
A US total-market index fund owns a little of nearly every publicly traded US company, so your return tracks the broad economy rather than any single winner or loser.
Disclaimer
Definitions are simplified for educational use and are not personalized financial, investment, tax or legal advice.