Index Fund A fund that tracks the performance of a market index, such as the FTSE 100 or FTSE All-World, by buying all (or a representative sample) of the securities in that index.
Index funds are the core tool of passive investing. Rather than trying to beat the market through stock selection, they simply replicate it at minimal cost. A global index fund might hold thousands of companies across dozens of countries, providing instant diversification in a single purchase. Index funds charge very low fees (typically 0.05-0.25% per year) because no active management is required. Decades of academic and industry research show that the vast majority of actively managed funds fail to outperform a comparable index fund over long periods, after fees. For most long-term investors, a single global index fund is a complete, sufficient investment. Related terms:  ETF, passive investing, FTSE All-World, active vs passive, fees Full page:  nofrillsinvesting.com/glossary/index-fund/