What is the difference between an index fund and a mutual fund?

An index fund and a mutual fund are both types of investment funds. A mutual fund is a pool of investments managed by an investment company. The company uses the money invested by its shareholders to purchase a wide range of assets, such as stocks, bonds, and commodities. The performance of a mutual fund is based on the performance of the underlying investments it holds. An index fund, on the other hand, is a type of mutual fund that tracks the performance of a particular stock market index. A stock market index tracks the performance of a group of stocks. An index fund is designed to match the performance of the index, so investors will receive returns that are similar to those of the index. Typically, mutual funds are actively managed, meaning they are regularly monitored and adjusted by a fund manager. Index funds, however, are passively managed, meaning that they are not actively adjusted by the fund manager. Instead, the index fund follows the index, regardless of external factors that may affect the performance of the index. In conclusion, the primary difference between an index fund and a mutual fund is that while a mutual fund is actively managed, an index fund is passively managed and tracks the performance of a particular stock market index.

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What is the difference between an index fund and a mutual fund?

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