What is an "index fund"?

Answer 1

a mutual fund that is comprised of all of the stocks found in a major index (nasdaq index fund, for example, has all the stocks found in the nasdaq.... S&P index fund has all the stocks in the S&P 500)

Answer 2

Here is the REAL DEFINITION of it.

An index fund or index tracker is a collective investment scheme that aims to replicate the movements of an index of a specific financial market.

Tracking can be achieved by trying to hold all of the securities in the index, in the same proportions as the index. Other methods include statistically sampling the market and holding "representative" securities. Many index funds rely on a computer model with little or no human input in the decision as to which securities to purchase and is therefore a form of passive management.

The lack of active management gives the advantage of lower fees. However, the fees will always reduce the return to the investor relative to the index. In addition it is impossible to precisely mirror the index as the models for sampling and mirroring, by their nature, cannot be 100% accurate. The difference between the index performance and the fund performance is known as the 'tracking error'.

Index funds are available from many investment managers. Some common indices include the S&P 500, the Wilshire 5000, the FTSE 100 and the FTSE All-Share Index.

If you are a risk averse investor, investing in an Index Fund is great. It lowers your overall risk, and also have lower expenses.

Answer 3

An index fund or index tracker is a collective investment scheme that aims to replicate the movements of an index of a specific financial market.

Tracking can be achieved by trying to hold all of the securities in the index, in the same proportions as the index. Other methods include statistically sampling the market and holding "representative" securities. Many index funds rely on a computer model with little or no human input in the decision as to which securities to purchase and is therefore a form of passive management.

The lack of active management gives the advantage of lower fees. However, the fees will always reduce the return to the investor relative to the index. In addition it is impossible to precisely mirror the index as the models for sampling and mirroring, by their nature, cannot be 100% accurate. The difference between the index performance and the fund performance is known as the 'tracking error'.

Index funds are available from many investment managers. Some common indices include the BSE Sensex, NSE S&P CNX Nifty, the Wilshire 5000, the FTSE 100 and the FTSE All-Share Index.

Answer 4

An index fund invests in the stocks which are part of a particular index, such as the S&P500 or the 30 stocks in the Dow Jones Industrial index.


The cost of administering such a fund is minimal, since no highly paid fund manager is needed to pick stocks, and so minimal fees are taken out of your share. This can be a big deal since some funds take a few percent of your money every year.

The returns on an index fund should reflect what ever the index does. It won't do worse than the broad market as a whole, but it also won't do better.

Answer 5

It is a mutual fund that basically invests in all the stocks listed on a certain index, like the S&P 500.

Investing in an index is often a good choice, since indexes like the S&P 500 routinely beat most other mutual funds out there. I never got why, but this has been shown to be true over many years.

Answer 6

An index fund is a way for you to invest (with a modest amount of money) in a large number of companies without having to buy individual stocks. An index is a collection like the S&P 500, or the Dow Jones Industrials.

Answer 7

A stock index is computed using a list of selected stocks whose value is run through a formula. An index fund is a fund that owns the exact same stocks and therefore rises and falls along with the index.

Answer 8

An index fund or index tracker is a collective investment scheme that aims to replicate the movements of an index of a specific financial market.

Answer 9

An index fund or index tracker is a collective investment scheme that aims to replicate the movements of an index of a specific financial market.

For more info see source:

Answer 10

index refers to a stock market index, there are a great many of them, dow jows industrilas is the most common, there is also the nasdaq index and other lesser known indexes that track specific areas of teh marker such as the chicago stock amrket index, gold index and etc, a person can buy and seel shares ont eh index stock gamblng on wether or ntore the dow jones in example will go up or down. therefore an index fund is a mutual fund that holds index stocks in its portfolio, betting on teh general performance of the market