noun

index fund

IN-deks fuhnd

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Index fund (noun) means an investment fund that holds the same things as a published market index, in the same proportions, so that its value rises and falls roughly in step with that index instead of relying on a manager to choose individual investments. Example: “Her whole retirement pot sits in a single global index fund.”

noun

An investment fund that holds the same things as a published market index, in the same proportions, so that its value rises and falls roughly in step with that index instead of relying on a manager to choose individual investments.

"Her whole retirement pot sits in a single global index fund."

"An index fund holding every company in the index does not need a team of analysts picking stocks."

How to use index fund

Learner’s notes

In plain EnglishA fund that copies a whole market instead of trying to pick the best bits of it.

When to use it

Neutral and standard in both professional and consumer finance writing. Two words in normal use.

Memory tip

The index in this term is a list, not a finger or the back of a book; it names a group of investments used as a yardstick for a market.

Trace the full origin ↓

Easily confused with

ETF → mutual fund → hedge fund → benchmark →

Common pairings

broad index fund index fund investing low-fee index fund S&P 500 index fund

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C2 · Advanced serendipity Fortunate discoveries made entirely by accident.

Gen Z slang rizz Charm — the ability to attract a romantic interest.

B2 · Intermediate empathy The capacity to share another person’s feelings.

C1 · Advanced nonchalant Casually calm and relaxed; unconcerned.

Internet slang delulu Delusional — believing something against the odds.

Etymology nostalgia Greek nostos “return home” + algos “pain”.

C2 · Advanced serendipity Fortunate discoveries made entirely by accident.

Gen Z slang rizz Charm — the ability to attract a romantic interest.

B2 · Intermediate empathy The capacity to share another person’s feelings.

C1 · Advanced nonchalant Casually calm and relaxed; unconcerned.

Internet slang delulu Delusional — believing something against the odds.

Etymology nostalgia Greek nostos “return home” + algos “pain”.

Test yourself on “index fund” A quick quiz — meaning, synonyms & usage →

Fill the gap

Can you complete this real example?

Her whole retirement pot sits in a single global _____.

Etymology

A compound of index, a published measure of a market's overall value, and fund, a pool of money invested on behalf of many people.

Origin: English

Synonyms

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tracker fund passive fund index tracker indexed fund

Antonyms

actively managed fund active fund

Related words

ETF

Frequently asked questions

What is the difference between an index fund and an actively managed fund?

An index fund simply copies a benchmark and holds whatever is in it, so almost no judgement is involved. An actively managed fund pays people to decide what to buy and sell in an attempt to beat that benchmark. Because active management costs more to run, active funds usually charge higher fees.

What is the difference between an index fund and an ETF?

They answer different questions. Index fund describes the strategy, which is to mirror an index. ETF describes the wrapper, which is a fund whose units trade on a stock exchange all day. A fund can be one, the other, or both at once.

Can an index fund lose value?

Yes. It holds the same investments as its index, so if the index falls the fund falls with it. Tracking an index removes the risk of a manager choosing badly; it does not remove the risk of the market itself declining.

What is the meaning of index fund?

"index fund" (noun) means an investment fund that holds the same things as a published market index, in the same proportions, so that its value rises and falls roughly in step with that index instead of relying on a manager to choose individual investments.

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