Equities
Index Fund
Rather than trying to beat the market, an index fund simply aims to match it. By holding all or a representative sample of an index's components, it delivers the index's return minus a very small fee.
This passive approach keeps costs low and has historically outperformed the majority of actively managed funds over long periods. It also provides broad diversification in a single purchase.
Index funds are a foundation of long-term investing, especially when combined with dollar-cost averaging. They let ordinary investors capture the market's growth without picking individual winners.
Example
An S&P 500 index fund rises and falls in line with the 500 largest U.S. companies it holds.
Index Fund — FAQ
What is Index Fund?
An index fund is a fund designed to track the performance of a specific market index, such as the S&P 500, by holding the same securities in the same proportions.
Can you give an example of Index Fund?
An S&P 500 index fund rises and falls in line with the 500 largest U.S. companies it holds.
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