What is an index mutual fund?

An index mutual fund is typically comprised of most or all of the stocks that make up a particular index, such as the Dow Jones industrial average (DJIA) or Standard & Poor’s 500 index or any of the other broad market indices covering different types of companies, industries or sectors.

What are the benchmarks for index funds?

Some common benchmarks for index funds include: The S&P 500: As noted above, Standard & Poor's 500 is an index of performance of the 500 largest U.S. public companies. The Dow Jones Industrial Average: This well-known index (also known as the DJIA) tracks the 30 largest U.S. firms.

How to buy index funds?

Index funds, which buy a basket of assets to track the performance of indexes like the S&P 500, are investment portfolio staples due to their low-cost, diverse nature. Here’s how you can easily and cheaply buy index funds to reach your investing goals. 1. Open an Investment Account You’ll need an investment account to buy index funds.

What types of indexes are tracked by index funds?

Examples of the kinds of indexes tracked by index funds include the Standard & Poor’s 500 Index, better known as the S&P 500, or the Dow Jones Industrial Average (DJIA). Index funds have grown in popularity in recent years, as a growing number of investors have adopted passive investing strategies.