What is an index fund?

InvestingWarren TeamPublished April 25, 2026

Quick answer

An index fund is a mutual fund or ETF designed to track a specific market index, such as the S&P 500. It buys all (or a representative sample) of the index's holdings and matches its returns minus a tiny expense ratio.

Index fund cost vs actively managed fund: 0.03% vs 0.75%.

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