Investor Glossary-index fundInvestor Glossary-index fundInvestor Glossary-index fundInvestor Glossary-index fundInsightful stock market charts - Click here
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Index Fund

The HTML to link to this page

An index fund is a portfolio of assets with allocation rules that remain fixed regardless of market conditions, commonly for the purpose of approximating the performance of some market index, such as the Russell 2000 Index. The index fund does not have to be linked to an existing index. Typically, an index fund is either a mutual fund or an exchange traded fund (ETF). John Bogle of the Vanguard Group proposed the index fund concept in 1975. They issued the first index fund, which matched the composition of the S&P 500. An index fund tends to have significantly lower fees and expenses than an actively managed fund because of its passive management style. Taxes are also reduced because less trading lowers realized capital gains for the index fund. Consequently, the typical index fund has outperformed the average of comparable actively managed funds by more than Bogle had originally anticipated. Even legendary fund manager Peter Lynch has stated that in most case an actively managed fund provides "no advantage" over an index fund.

Rate this index fund definition...

Learn about investing with the Investor Glossary Term of the Day

Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.

Popular Terms: required rate of return, ex-dividend date, Key Rate Duration, FICO score, VIX, deferred revenue, class C shares, in escrow, wholly-owned subsidiary, reverse mortgage, minority interest, option premium, risk management, LIBOR, irrevocable trust, average price per share, 144a, implied volatility, margin rate, annual return, current ratio, dividends payable, Zero Cost Collar, real GDP, limit order, EBITDA, open position, stock market close, cancelled check, retained earnings, debt service coverage, deferred tax, phantom income, command economy, APR, ex-dividend, FTSE, per diem, 1031 exchange, labor relations, inflation, stock split, covered put, 401a, diluted share, liquidity ratio, balance sheet, 1035 exchange, quality assurance

Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use