The so-called index fund is a passive stock fund and a kind of stock fund. The index fund has already determined the main investment direction when it was established. An index fund is actually a combination of a series of stocks, all of which are agreed. After the establishment of the fund, the fund manager only needs to buy stocks according to the agreed stock portfolio, and finally this index fund is formed.

Second, how to buy index funds?

1. When the market is in an upward trend, it is more appropriate to choose a broad-based index fund.

There are many kinds of index funds, one of which is divided into broad-based index funds and narrow-based index funds according to the size of the fund's investment scope.

Among them, broad-based index funds mainly invest in the top companies in the stock market, which not only has obvious scale advantages, but also invests in stocks in different industries, which can fully reflect the economic development of China and is closely related to the market trend; The main investment direction of narrow-based index funds is a certain industry, which reflects the development of a certain industry more intensively and does not necessarily coincide with the trend of the broader market. If the market is on the rise, it is more appropriate to choose a broad-based index fund.

2. Index funds dominated by large-cap stocks and small and medium-cap stocks have different risks and can choose by themselves.

The main investment directions of different index funds are different. Some index funds mainly invest in large-cap stocks, while others mainly invest in small-cap stocks. Index funds with different investment directions have different risks.

From the historical data, the index funds that invest in large-cap stocks fluctuate relatively little. Because the value of large-cap stocks is relatively stable, when the market fluctuates greatly, the corresponding index funds fluctuate relatively little and the risk is relatively small. Index funds that invest in small-cap stocks fluctuate greatly. Because the value of small-cap stocks changes greatly, but the growth is good, when the market fluctuates, the index funds of small-cap stocks will fluctuate more and the corresponding risks will be higher. We can make corresponding choices according to our different risk tolerance.