Index funds generally refer to index funds, which are funds that invest in index constituent stocks, with the goal of obtaining roughly the same rate of return as the index. Simply put, it does not buy a specific stock, but a basket of stocks to track the corresponding index.

According to the buying strategy, index funds can be divided into passive index funds and enhanced index funds: the former completely replicates the index, and you buy whatever stocks are included in the index; while the latter replicates most of the assets of the index, A small portion of assets are actively invested. This determines that passive index funds have lower fees (you only need to keep an eye on the index and do not need to frequently adjust positions and stocks), while enhanced index funds are relatively flexible.

Operation method

Index fund is a fund that constructs an investment portfolio based on the compilation principle of security price index for securities investment. Theoretically speaking, the operation method of index funds is simple. Just buy the corresponding proportion of securities according to the proportion of each security in the index and hold it for a long time.

Related summary

For a purely passively managed index fund, the fund turnover rate and transaction costs are relatively low. Management fees also tend to be minimal. This type of fund does not invest excessive amounts of money in specific securities or industries. It generally remains fully invested and does not speculate in the market. Of course, not all index funds strictly meet these characteristics. Different funds with index nature will also adopt different investment strategies.