Index Funds

Index funds are mutual funds or exchange-traded funds (ETFs) that aim to replicate the performance of a specific market index, such as the S&P 500 or the NASDAQ. Rather than trying to outperform the market, index funds are passively managed, meaning they hold the same securities as the underlying index. Index funds are popular for their low costs, diversification, and ability to match market returns. They are commonly used by long-term investors looking for consistent, low-cost exposure to a broad range of assets.

Example

An S&P 500 index fund invests in all the companies listed in the S&P 500, aiming to match the performance of the index and providing investors with broad market exposure.