Index fund

Index fund — a fund that holds every significant company in a market, weighted by size, with no manager picking anything. It captures the market’s return minus a tiny fee, which the evidence (persistence studies, fee arithmetic) shows beats the vast majority of active alternatives over time. Note what it is not: a creation machine. It harvests whatever growth the underlying market produces — which is why the market you index matters.

First used in: 1.5 · Why the index wins (principles)