Index fund

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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 BPI Philippine Consumer Equity Index Fund invests in corporations that derive at least 50 percent of their revenue from consumer products or services, or have at least 50 percent of the fair value of their net assets being utilized for consumer-related business activities.
The Fidelity Short-Term Bond Index Fund seeks to provide investors with a high level of current income along with capital preservation; its benchmark is the Bloomberg Barclays U.
Vanguard International High Dividend Yield Index Fund follows an income investing strategy, focusing on companies with high dividend yields.
The Legal & General Global Real Estate Dividend Index Fund provides exposure to global developed market property companies and Real Estate Investment Trusts by tracking the FTSE EPRA/NAREIT Developed Dividend Plus Index.
When these companies lose some appeal, as inevitably happens, the index may drop sharply, pulling down index funds.
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.
Annual redemption rates for Vanguard's traditional index funds, are around 8% compared to the 3,000% turnover of assets in State Street's S&P 500 SPDR ETF, writes Bogle in Monday's Financial Times newspaper.
Vanguard said it has added China A-shares in its Emerging Markets Stock Index Fund, and Canadian equities to its Developed Markets Index Fund.
Nevertheless, current low dividend yields are a persuasive argument in favor of index funds.