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 ?
If this is the case a well-constructed fund that avoids heavy exposure to such funds may outperform a tracker fund.
Wikus Fourie, Business Development Manager at Sanlam Namibia Unit Trusts said, Tracker funds furthermore expose the investor to a wider range of companies in a relevant index, thereby eliminating manager selection bias.
You can put your money into what is known as a tracker fund.
The firm would launch two new UK-domiciled open ended investment companies to join the UK gilt tracker fund.
But when prices are low, it's the best time to start drip-feeding money in to tracker funds.
For a free guide explaining tracker funds, call 0800 544644.
This is because of tracker funds which base their portfolios on shares that at least match the performance of those in the index.
In times of good stockmarket performance tracker funds are attractive.
The tracker funds will be managed by Vanguard's Core Management Group, which presently manages more than $105 billion ($U.
HSBC Global Asset Management is considering the launch of its first emerging markets index tracker funds.
But despite disappointing returns when compared with other investment funds, funds that invest along ethical guidelines have out-performed the FTSE 100 in all four of the periods looked at, while they have beaten tracker funds in three of them.