Index fund is a kind of fund with the principle of fitting the target index and tracking the change of the target index to realize the synchronous growth with the market. The investment of index funds adopts the investment strategy of fitting the target index return rate, and invests in the constituent stocks of the target index in a diversified way, so that the stock portfolio return rate fits the average return rate of the capital market represented by the target index.

The difference between index funds and other funds is that it tracks the performance of stock and bond markets and follows a stable strategy. Its advantages in the securities market include not only effectively avoiding unsystematic risks, low transaction costs and delaying tax payment, but also the characteristics of less monitoring investment and simple operation. Therefore, in the long run, its investment performance is better than other funds.

Index fund is a kind of fund that constructs a portfolio for securities investment according to the principle of compiling securities price index. Theoretically speaking, the operation method of index fund is very simple, as long as you buy the corresponding proportion of securities according to the proportion of each securities in the index and hold it for a long time.

For purely passively managed index funds, the capital turnover rate and transaction cost are relatively low. Management fees are often very small. Such funds will not invest too much money in certain securities or industries. Generally, full investment will be maintained, and there is no market speculation. Of course, not all index funds strictly meet these characteristics. Different index funds will also adopt different investment strategies.

If you think that the index can't go down at this stage, the risk of index funds is small, and vice versa.