Index fund

An index fund is a fund, structured as either an ETF or a mutual fund, built to match the performance of a specific market index such as a broad stock market benchmark rather than to try to beat it. It buys and holds the same securities the index holds, in roughly the same proportions.

Because there is no active manager trying to pick winners, index funds typically charge much lower fees than actively managed funds. Over long periods, low-cost index funds have historically been difficult for most active managers to consistently beat after fees, which is why they are a common starting point for new investors.