Index fund

How it is used

Popular for long-term saving because of low fees. People invest in an index fund that tracks the S&P 500, the BIST 30 or a global index. Index funds can be mutual funds or ETFs; the difference from the index's return is called tracking error.

Example sentences

1. Instead of choosing stocks, she puts a fixed amount into an index fund every month.

2. Low-cost index funds have attracted huge inflows over the past decade.

Common collocations

• invest in an index fund
• low-cost index fund
• S&P 500 index fund
• track an index

Related terms

• ETFShort for exchange-traded fund: a fund that holds a basket of assets, often following an index, and whose units are bought and sold on a stock exchange like shares.
• passive investingA strategy of buying funds that follow a market index and holding them for a long time, rather than choosing individual stocks or timing the market.
• expense ratioThe yearly cost of running a fund, shown as a percentage of the money invested in it. It is taken from the fund's assets, so it reduces investors' returns.
• benchmarkA standard, usually a market index, against which the performance of a fund, portfolio or investment manager is measured.
• indexA number that shows how the prices of a selected group of shares or bonds change over time, used to measure a whole market or sector.

More terms: Funds & ETFs

• mutual fund
• net asset value
• hedge fund