Index funds are passive investments. They track an index with the goal of replicating the performance of that index, minus expenses. Active funds, meanwhile, are led by managers who choose particular securities in an effort to outperform an index.
However, some index funds are better than others. The best index funds do a good job of closely tracking their indexes, minimizing costs, and following sensible rules-based indexes.
Why Are Index Funds Such a Popular Investing Option?
The first index fund, Vanguard 500, debuted in 1976. Since then, funds that index the US stock market have exploded in popularity. And index funds that focus on international stocks and bonds are becoming more popular, too.
Why? Many argue that buying and holding the broad market (whatever that market may be) generates better results than trying to beat that same market through actively selecting securities….
