Last updated: January 19, 2026
An index fund is a mutual fund or ETF designed to match the performance of a market index, such as the S&P 500 or Nasdaq 100.
Index funds offer broad market exposure, low fees, and passive management. Studies show most active managers underperform indexes long-term.
Popular index funds include Vanguard 500 (VOO/VFIAX), Fidelity ZERO, and Schwab S&P 500.
Understanding index fund helps you make better investment decisions and plan for taxes. Explore related concepts below to deepen your knowledge.
An index fund is a type of mutual fund or ETF with a portfolio constructed to match or track the components of a financial market index, such as the S&P 500.
Index funds offer broad market exposure, low operating expenses, and low portfolio turnover. They follow a passive investment strategy, which historically outperforms most active managers.
Look for funds with the lowest 'expense ratio' (annual fee) and follow the specific index you want exposure to (e.g., Total US Stock Market or S&P 500).
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