What Is an Index Fund?
It measures a part of the market and follows published rules, such as company size.
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1.What is an index, in the video's words?
It measures a part of the market and follows published rules, such as company size.
2.What decides which stocks an index fund holds?
Nobody has to guess which company will win; the rules do the choosing.
3.Three companies have sizes 600, 300 and 100. What weight does the biggest get by size?
600 of 1,000 is 60 percent, then 30 percent, then 10 percent.
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Sources (3)
- SEC, Mutual Funds and ETFs: A Guide for Investors (Abschnitte Index-based Funds, Actively Managed Funds, A Word on Active and Passive Investing, Key Points)
- SEC Office of Investor Education and Advocacy, Investor Bulletin: Exchange-Traded Funds (ETFs) (Abschnitt Index-Based ETFs)
- Eigene Rechnung: Drei-Firmen-Index, Gewichtung nach Groesse
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