Types of Index Funds
Broad Market Index Funds: These funds copy a large section of the stock market. Large market index funds have low expense ratios. These funds are tax-efficient and also popular among those who want a large variety of stocks and bonds.
Bond-Based Index Funds: These type of funds comprises short and long-term bond maturities for steady revenues. This combination helps in the diversification of the portfolio but also makes healthy returns. This type of investment is popular among investor who needs a steady income.
Market Capitalization Index Funds: Market Capitalization simply means the market value of the company. This market capitalization is based on the market cap. This type of fund is suitable for the investor having a long-term investment strategy. Due to higher exposure in the market, they give massive returns.
Earnings-based Index Funds: These types of index funds are linked to companies having a higher capacity to generate profit than others in the market and also those trading at a lower cost compared with the company’s earnings. In this type of fund loss-making, the chance is quite low.
International Index Funds: These funds are not limited to a particular country. It gives the investor exposure to the international market. It can be affected if a specific country’s economy is outperforming or underperforming.
What are Index Funds?
Diversification is important to be a good investor, so people buy mutual funds and start investing, but it also has some risks. Now, to decrease the equity market risk. Investors start looking for Index Funds. Here we will talk about Index Funds along with their benefits and a lot more.