Seguros y pensiones para todos

Home > Glossary > Index fund

Index fund

An index fund or index tracker is an investment fund that replicates the performance of an index rather than actively seeking to outperform the market.

Index funds are, together with ETFs, the main tools of passive management.

The objective of an index fund is to match the performance of the index or benchmark it replicates as closely as possible.

To make it easier to understand, while an actively managed fund will seek to choose which companies to invest in and when to do so, an index fund will be content to replicate their performance. It does so because studies have found that, over the long term, few active fund managers manage to outperform the average market.