Difference between index fund and equity fund

Index fund is a kind of stock fund,index fund is aimed at a specific index.

Index fund is a kind of fund variety which is based on the principle of fitting the target index and tracking the change of the target index to realize the growth in synchronization with the market. The investment of the index fund adopts the investment strategy of fitting the return of the target index, diversifies the investment in the constituent stocks of the target index, and strives for the return of the stock portfolio to fit the average return of the capital market represented by the target index. Index fund is an indispensable kind of fund in the mature securities market. In the western developed countries, it is increasingly favored by various types of institutions, including exchanges, securities companies, trust companies, insurance companies and pension funds, as are other index products such as stock index futures, index options, index warrants, index deposits and index notes.

An index fund is a fund that guarantees that a portfolio of securities will perform similarly to a market index. Operationally, it is the same as other ****similar funds. The difference between an index fund and other funds is that it tracks the performance of the stock and bond markets and follows a stable strategy. Its advantages in the securities market include not only effective avoidance of non-systematic risks, low transaction costs and delayed taxation, but also low monitoring inputs and easy operation, which makes its investment performance better than that of other funds in the long run.

The index fund is a kind of fund that constructs a portfolio to invest in securities according to the principle of compiling securities price indexes. Theoretically, an index fund is simple to operate, as long as the proportion of each security in the index is purchased and held for a long period of time.

For a purely passively managed index fund, fund turnover and transaction costs are relatively low. Management fees also tend to be minimized. This type of fund does not over-commit to particular securities or sectors. It generally stays fully invested without engaging in market speculation. Of course, not all index funds strictly fit these characteristics. Different funds with index properties will also adopt different investment strategies.