Index fund
An index fund is a pooled investment that mechanically holds every stock in a market index, aiming to match the index’s return at very low cost.
An index fund is a mutual fund or ETF that tracks a market index — most commonly the S&P 500 — by holding all (or a representative sample of) its constituents in the same proportions. Rather than trying to beat the market by picking winners, it simply aims to match the index’s return, which keeps costs very low.
Index funds are popular because decades of evidence show that most active managers fail to beat their benchmark after fees, and low costs compound powerfully over time. The trade-off is that an index fund can never outperform its index — it accepts the market’s return, good or bad, and offers no protection in a broad downturn.
stocks-llm is a tool for researching individual companies, not funds — it does not cover or rank index funds or ETFs. This definition is educational only and is not a recommendation of any fund.
See more terms in the stocks-llm glossary.
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