what are index funds?

Index Fund is a type of mutual fund or ETF that tracks the performance of a financial market index like (FTSE – 100 largest UK companies listed in the stock exchange, DAX 30, German index listing the 30 largest companies that trade on the Frankfurt stock exchange and the CAC40, the 40 largest stocks on the Euronext Paris stock exchange, Japan’s Nikkei 225, ASX 200, largest companies in Australia)

• An index fund is a mutual fund that’s not actively managed by a financial manager.

• Index funds are passively managed by a manager and is designed to mirror the performance of an index

• Index funds are purchased in value amounts. Ex: 1 000 €

• Trade only once per day the close of the market

• No need to research individual stocks

• Requires little research for a beginner as you are buying from an index

• Highly diversified as you are buying from an index with hundreds of companies

• May have a minimum initial investment amount. Ex: 1 000 € or more

• Charges low mgt fees

In the UK, the iShares Core FTSE 100 UCITS ETF tracks the whole of the FTSE 100 and is recognized as one of the more successful index funds.

In the US, S&P 500 index, which comprises 500 of the largest US companies listed on the New York Stock Exchange.