![An index fund is a passively managed mutual fund.](https://yourtotalwealth.com/wp-content/uploads/2024/02/Index-Funds.jpg)
An index fund is a passively managed mutual fund. They don’t try to find undervalued securities or actively trade in and out of stocks (or bonds, for bond index funds). They buy a portfolio of securities that replicates an index, such as the S&P500 Index. Then, they hold that portfolio, trading only when necessary (e.g., because a company was acquired…