Index fund

Index funds are mutual funds or exchange traded funds with specific and clearly defined sets of rules of ownership. When stocks or bonds are within the rules of ownership, they are purchased and held. When they no longer meet the rules, they are sold. For example, a Small Value Index Fund will have a clear set of rules that define small and value. However, those rules are not the same for all small value indexes. Vanguard (S&P 600 Barra Value), Dimensional Fund Advisors (Fama-French Small Value), Russell (Russell 2000 Value), and Wilshire (Wilshire Small Value) all have small value indexes, but no two of them have the same set of rules of ownership.