Index fund

(redirected from Index funds)
Also found in: Dictionary, Thesaurus.

Index fund

Investment fund designed to match the returns on a stock market index. Mutual fund whose portfolio matches that of a broad-based index such as the S&P 500 and whose performance therefore mirrors the market as represented by that index.

Index Fund

A mutual fund that is not actively-managed and simply tracks a benchmark index. That is, the investment company managing the mutual fund places the liquidity in securities represented in a certain index. Thus, when that index increases in price, so does the mutual fund, and vice versa. An exchange-traded fund is a prime example of an index fund. Many popular tracker funds track the S&P 500 and other S&P indices. An index fund is less commonly called an index fund. See also: Closet index fund, SPDR.

index fund

A mutual fund that keeps a portfolio of securities designed to match the performance of the market as a whole. The market is represented by a market index such as the S&P 500. An index fund has low administrative expenses and appeals to investors who believe it is difficult or impossible for investment managers to beat the market. Also called market fund.

Index fund.

An index fund is designed to mirror the performance of a stock or bond index, such as Standard & Poor's 500 Index (S&P 500) or the Russell 2000 Index.

To achieve that goal, the fund purchases all the securities in the index, or a representative sample of them, and adds or sells investments only when the securities in the index change. Each index fund aims to keep pace with its underlying index, not outperform it.

This strategy can produce strong returns during a bull market, when the index reflects increasing prices. But it may produce disappointing returns during economic downturns, when an actively managed fund might take advantage of investment opportunities if they arise to outperform the index.

Because the typical index fund's portfolio is not actively managed, most index funds have lower-than-average management costs and smaller expense ratios. However, not all index funds tracking the same index provide the same level of performance, in large part because of different fee structures.

References in periodicals archive ?
The European Stock Index Fund will begin tracking the FTSE Developed Europe All Cap Index and the Pacific Stock Index Fund will begin to track the FTSE Developed Asia Pacific All Cap Index.
An individual seeking to invest in both actively managed and index funds will generally benefit by using index funds for taxable investment assets and reserving actively managed funds for retirement assets.
When you buy an index fund you are investing in the American economy, in the best part of the American economy,'' Fischer said.
These latest moves are another example of our commitment to providing workplace retirement plan sponsors and individual investors access to a wide-array of high-quality index funds at some of the most competitive pricing in the industry.
China A-shares will be added to Vanguard Emerging Markets Stock Index Fund and its ETF share class-VWO, the world's largest emerging markets ETF-making them the first broad-based emerging markets, market-cap weighted index fund and ETF to include exposure to A-shares and all-caps.
I believe that with a little research, an investor can construct a highly tax-efficient portfolio using the variety of index funds currently available and, at the same time, maintain performance with a minimum of risk per unit of return.
Vanguard Group, the second-largest mutual fund company in the nation after Fidelity Investments, is the father of index funds.
Assets in the funds' current international component funds--Vanguard European Stock Index Fund, Vanguard Pacific Stock Index Fund and Vanguard Emerging Markets Stock Index Fund--will be moved to Vanguard Total International Stock Index Fund.
Both report locally to Chad Rakvin working alongside Shaun Murphy, director of index funds.
The suggestion that index funds are momentum plays because the funds indiscriminately buy larger positions in stocks of companies that are larger in size is incorrect.
They compared the clubs' performance to the Vanguard Index 500, a no-load index fund that mirrors the Standard & Poor's 500 index, which is considered one of the best barometers of the overall market.