What are index funds?

Let's take a closer look at one of the main types of ETFs, namely the so-called. index funds.

Known index funds are a passive form of investment. These funds have certain rules according to which the shares are included, after which it monitors the movement of the share prices without trying to beat the performance of the main index.

Index funds can be both exchange traded funds and mutual funds and their purpose is to provide an opportunity for wide market exposure at low operating costs. These funds monitor the performance of their main benchmark , regardless of its performance.

Legendary investor Warren Buffett has recommended index funds as a haven for savings for later years in life.

Here are some of the main features of index funds:

* Index funds are a portfolio of stocks or bonds

* They are designed to follow the presentation of a stock index

* Index funds have lower costs than actively managed funds

* They are a passive investment strategy

8. Formulate strict risk management rules

A fund from which the history of index funds began was founded by Vanguard President John Bogle in 19876.