By Ziv Shay | Updated June 2026

Index Fund

A fund designed to match the performance of a market index, such as the S&P 500, rather than beat it.

An index fund passively tracks a benchmark by holding the same securities in the same proportions as the index. Because there is no expensive team of stock pickers, fees are minimal. Decades of data show low-cost index funds outperform the majority of actively managed funds over long horizons, which is why they anchor most retirement portfolios.

Example

A total-market index fund like VTI or FZROX holds thousands of U.S. stocks. When the overall U.S. market rises 10%, your fund rises roughly 10% minus a tiny fee — no individual stock research required.

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