Index fund

(redirected from Passively managed fund)
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 ?
Lawsuits filed against plan sponsor fiduciaries allege that they acted imprudently in the selection of passively managed funds.
Although 15 of the 72 funds beat a passively managed fund on a pretax basis, only 5 did so after taxes.
Notably, there is no guarantee that plan fiduciaries will avoid liability exposure by offering only passively managed funds.
In more economically advanced countries, passively managed funds match or outdo the performance of actively managed funds because those markets are already efficient.
This study found that for the period, 1995 to 2007, average monthly risk-adjusted returns per quarter for actively managed funds were not significantly different from average monthly risk-adjusted returns per quarter for passively managed funds classes.
Additionally, 30% increased their use of passively managed funds in the past year, whereas only 18% increased their use of actively managed funds, and 39% plan to increase their use of exchange-traded funds (ETFs) over the next 12 months.
Actively and passively managed funds can complement each other and allow investors to fill portfolios with the best investment opportunities, both within and across markets.
European passively managed funds under management during the same period rose to #x20AC;621 billion ($844.
For example, Barr wrote, "the Department's discussion regarding the relative risks of active and passive management and its focus on costs could lead plan sponsors to overweight passively managed funds in 401k plan menus.
The investment portfolios emphasize low-cost, high-performing passively managed funds.
Schwab Indexed Retirement Trust Funds - Passively managed funds tied to target retirement dates in five-year increments from 2010 to 2050.
74% to taxes for the highest taxed investors while passively managed funds lost 0.