Index fund is a fund product that takes a specific index as the target index, takes the constituent stocks of the index as the investment object, builds a portfolio by purchasing all or part of the constituent stocks of the index, and tracks the performance of the target index.

It mainly includes opening positions, reinvesting and tracking adjustment. Index fund is a kind of fund that constructs a portfolio for securities investment according to the principle of compiling securities price index.

Index funds invest in stocks according to the distribution of relevant stock market indexes, so that their fund returns are close to those of market indexes. The purpose of index fund is to reduce the tracking error, make the change trend of portfolio consistent with the underlying index, and thus obtain roughly the same rate of return as the underlying index. At present, the mainstream indexes in the market are Shanghai and Shenzhen 300 Index, S&P 500 Index and Nasdaq 100 Index.

There are more and more index funds in the market, and it is more and more difficult to choose index funds. Investors should pay more attention to two points when choosing index funds: on the one hand, finding such an index is as difficult as choosing stocks;

On the other hand, choose index funds with smaller investment tracking errors. The smaller the tracking error of funds, the stronger the management ability of fund managers, and the more investors can achieve the goal of obtaining index returns.