Bogleheads:Featured article/Index fund

An index fund pools investors' money, and uses it to invest in securities, aiming to replicate an index of a particular financial market. It is typically a mutual fund or exchange-traded fund (ETF).

A well-managed index fund gives investors a simple way to invest with low costs, better tax efficiency, style consistency, and lower manager risk. However, not every index fund is low cost, and active investors can exploit some indexes.

The key measure for assessing an index fund's efficiency is how well it tracks its benchmark index. (more...)