An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the S&P 500. Index funds are designed to provide broad market exposure, diversification, and long-term growth potential. They are passively managed, which means that the fund manager does not make active decisions about which individual stocks to buy or sell. Instead, the fund simply tracks the index it is designed to follow.
Index funds have become increasingly popular in recent years due to their low costs, simplicity, and potential for solid returns. They are often considered a good option for investors who are looking for a long-term investment with a low level of risk.