FUNDS • GUIDE

Index Funds Explained

Understand index funds, passive investing, tracking difference and benchmark selection.

An index fund seeks to track a specified index rather than selecting securities through active management.

What to check

Review benchmark, tracking difference, expense ratio, fund size and portfolio construction.

Risk

An index fund still carries the risk of the market it tracks.

Index choice

Broad, sector, factor and international indices have different exposures.

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