1. The risk is relatively stable. Theoretically, the operation of index funds 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 them for a long time. In terms of risk prevention, on the one hand, index funds invest widely, and the fluctuation of any stock will not affect the overall performance of index funds, which disperses risks. On the other hand, the risk of index funds can be predicted to some extent, because the basic index usually has a long tracking history.

2. Index funds can be used as hedging arbitrage tools. For investors, especially institutional investors, index funds are an important tool for hedging arbitrage. Because of the stability of the rate of return and the dispersion of investment, index funds are especially suitable for capital investment with large amount and low risk tolerance, such as social security funds.

3. Reduce risks by fully diversifying investment. Because index funds widely diversify their investments by tracking indexes, their portfolio returns are basically consistent with the corresponding indexes, thus reducing the overall investment risk of investors.

4. With high transparency, investors can usually judge the changes in the net value of the index funds they invest in, and how many losses and gains there are. Because the indexes tracked by index funds are uniformly formulated by the stock exchange, the influence of human factors is also avoided. Only by adjusting the sample stocks in the index, the index fund can adjust the positions of the stocks, and the operation is very transparent.