What is An Index Fund?
An index fund is an investment fund that attempts to replicate the performance of a given index of stocks or some other investment type.
An index fund does not pick and choose its investments, but instead holds all of the stocks or bonds on an index.
It amounts to a person or a committee of people sitting down and coming up with a list of rules as to how to construct a portfolio of individual holdings because, in the end, the only thing you can actually do is invest in individual common stocks or bonds, presuming we're limiting our discussion to equity and fixed income markets.
Since an index fund owns all of the investments in the index, there is no picking winners and losers.
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