An Index Fund is…

June 11th, 2009

An index fund is a mutual fund, or compilation of instruments (such as stocks, bonds, housing, art, commodities), that mimic the composition of an index. For example, if the index fund replicates the S&P 500 index, all 500 stocks (in the appropriate percentages) would be in that fund. Because it’s a mutual fund, the monetary value of an index fund is determined at the end of each trading day (as opposed to the price of a stock, which fluctuates throughout the day).

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