What is Index Fund?
You can't invest in an index directly; an index fund holds all of its securities or a sample. It carries the same general risks as its index, may not track it perfectly, and is not always cheaper than an actively managed fund.
Also called Index tracker
Impact of one holding = Weight × Its change
One company falls 50% (illustrative)
- All in that stock (weight 100%)
- −50%
- Index fund where it is 1%
- −0.5%
- Fund change
- −0.5%Other holdings unchanged
"An index fund can't lose much"
It falls with the market it tracks.