Glossary
Index Fund
An index fund is a type of mutual fund or ETF designed to track the performance of a specific market index, like the S&P 500. Instead of picking individual stocks, it holds all (or a representative sample of) the securities in that index.
Why it matters
Over any 15-year period, roughly 90% of actively managed funds underperform their benchmark index. Index funds offer broad diversification, ultra-low fees, and market-matching returns — a combination that has made them the default recommendation from Warren Buffett to most financial advisors.
Example
A total U.S. stock market index fund with a 0.03% expense ratio gives you exposure to over 3,600 companies for $3/year per $10,000 invested.
How Ray helps
Ray can identify index funds in your portfolio and compare their performance against your other holdings. Ask to see your passive vs. active investment split.
$ ray "what percentage of my investments are in index funds?"Related terms
Expense Ratio
An expense ratio is the annual fee a fund charges its shareholders, expressed as a percentage of assets.
Mutual Fund
A mutual fund pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities.
Diversification
Diversification means spreading investments across different asset classes, sectors, and geographies to reduce the impact of any single investment's poor performance on your overall portfolio..
Asset Allocation
Asset allocation is how you divide your investment portfolio among different asset classes — stocks, bonds, real estate, and cash.
Dollar-Cost Averaging
Dollar-cost averaging (DCA) is investing a fixed amount at regular intervals regardless of market conditions.