Index fund

An index fund is a mutual fund scheme that simply holds the same shares, in the same proportion, as a stated index such as the Nifty 50. No fund manager picks stocks, so the expense ratio is far lower than an actively managed scheme — often a fraction of a percent. The trade-off is that it will never beat its index; it aims to match it, minus costs. The small gap that remains is called tracking error. Returns still move with the market and are not assured, because the index itself can fall.