As the name implies, index funds are fund products with specific indexes (such as Shanghai and Shenzhen 300 Index, Standard & Poor's 500 Index, Nasdaq 100 Index, Nikkei 225 Index, etc.). ) as the target index, and take the constituent stocks of the index as the investment object, build a portfolio by buying all or part of the constituent stocks of the index, and track the performance of the target index.

Generally speaking, the index fund aims to reduce the tracking error, make the change trend of the portfolio consistent with the underlying index, and thus obtain roughly the same rate of return as the underlying index.

Extended data

Because some or all of the securities purchased by the index fund come from the sample securities of the securities market index it tracks, and the investment ratio of a single securities is close to or consistent with the ratio of various securities in the underlying index, the return rate of the index fund can basically be guaranteed to be consistent with its underlying index.

Index funds can get the average rate of return in the market, and at the same time, they can avoid the risk brought by the misjudgment of fund managers and the high unsystematic risk brought by excessive concentration of investment.

Refer to Baidu Encyclopedia-Index Fund