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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
This index fund has remained a top choice for many industry experts like Warren Buffett, as it charges a mere 0.04% expense ratio while investing in the 500 companies within the S&P 500 index.
After a slow start, the Vanguard 500 Index Fund has steadily grown to what is now one of the largest mutual funds in the world with assets in excess of $400 billion.
You can then program your stockbrokerage account to automatically invest the amount in the equity index fund of your choice.
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Index funds are merely a vehicle for asset owners' views; the funds themselves do not drive equity market prices or individual stock prices.
Of these TDFs, actively managed funds were the most popular, at 41.6%; index funds were used by 20.6% and custom funds by 11%.
The highest performing index fund for the fifteen years ending 12/31/2014; 95 (35%) actively managed funds beat this return (data per the Momingstar database).