Index fund


    An index fund is a security that tracks the performance of a particular index, such as stock market indices. Mostly, they themselves are traded on stock markets, making them so-called “exchange-traded funds”.

    Index funds form a substantial minority of global financial markets – around 12% in both the UK or US, for example.

    The most popular tracked index is the S&P 500, but funds can track whatever the managers decide to follow. Other popular funds track the Dow Jones, the DAX and other large indices.

    Trading index funds

    As an investment, index funds often offer a better rate of return to investors compared to actively managed funds.

    Trading index funds follows the same principles like trading stock market shares making technical analysis a popular technique: