1, the so-called index fund is a fund that tracks a specific index to invest in order to obtain long-term stable income. Since it was introduced in the United States in 1970s, it has been favored by investors and gradually become the main investment product in mature markets. Index funds buy securities according to the proportion of index samples they track, the main purpose of which is to obtain a similar rate of return to the index. Their investment strategy is passive investment to eliminate systemic risks, reduce costs, follow the market in operation, and passively gain benefits in the overall economic rise. Its characteristic is that the portfolio is equal to the weight ratio of the market price index, and the income fluctuates with the current price index. When the price index rises, the fund's income increases, and vice versa. Because the fund always maintains the average income level of the current market, the income will not be too high or too low.
2. The stock market in our country is relatively short, and there are many imperfections. For example, there are rat warehouses or insider trading in traditional stock-based foundations, that is, the fund manager deliberately chooses some stocks related to interests for his own selfish desires. Moreover, people have selfish desires, and people's stock selection will inevitably be affected by subjective emotions. Then, index funds can help us avoid this kind of institutional risk, because index funds choose stocks according to the index, and the rules of the index are set at the beginning. Anyone can inquire and supervise, and index funds will not have rat warehouses or interest transfer.