Glossary
Index Fund
A fund that mechanically tracks a market index rather than picking stocks actively.
An index fund is a pooled investment vehicle — usually a mutual fund or ETF — that mechanically tracks a market index such as the S&P 500, MSCI World, or Tadawul All Share. It does not attempt to beat the market.
Because there is no active stock selection, operating costs are minimal and expense ratios are typically 0.03–0.20%, an order of magnitude below most actively managed funds.
Pioneered by John Bogle at Vanguard in 1975, index funds now dominate global retail flows. Long-run evidence strongly favours them over the average active fund, after fees and taxes.