Series 6: 5.1.2.5 Index Funds

Index funds are mutual funds set up to track the returns of a specific market index. An index contains a group of securities meant to represent a particular market segment.  

Well-known indexes include: 

• -S&P 500 (500 large capitalization stocks) 
• -Wilshire 5000 (total US stock market) 
• -Russell 2000 (small capitalization stocks) 
• -MSCI EAFE (foreign stocks)  
• -Bloomberg Barclays US Aggregate Bond Index (total US bond market) 
• -Nasdaq Composite (stocks listed on the Nasdaq exchange) 
• -Dow Jones Industrial Average (30 large-cap, blue-chip stocks) 

An index fund will typically hold securities -- stocks or bonds-- in the same proportion