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 ?
The big investors, mainly pension funds, who use the tracker funds have woken up to a possible consequence of this, namely that with oil shares and bank shares now possibly at the end of a good upward run (based on the exceptional jump in the oil price and the unusually long period of stable interest rates) it may not be such a good idea to slavishly follow a share index heavily weighted towards these two sectors.
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In answer to a recent enquiry, you quoted figures for a tracker fund which do not match my own records.
Except shareholders and tracker funds still see such businesses as akin to the Blackburns and Middlesbroughs of this world.
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But it is the nature of tracker funds that they follow the ups and downs of indexes.
HSBC Global Asset Management is considering the launch of its first emerging markets index tracker funds. It is also planning to significantly expand its range of exchange traded funds (ETFs).
Annual management charges on tracker funds are typically 0.5% lower than actively managed funds, but often still levy an annual charge of between 0.75% and 1%.
But when prices are low, it's the best time to start drip-feeding money in to tracker funds.
Tracker funds replicate the performance of an index, such as the FTSE-100 or FTSE All Share, and tend to have lower management charges than managed funds.
Govett (0207 407 7888) and HSBC (0207 260 8000) offer tracker funds linked to the 250-share index.