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ETF Dictionary

Index Fund ETF

Explaining the Term “Index Fund” in the Stock Market. Let’s get close to ETF Investments with KIS Prime ETF.

Tìm hiểu về chỉ số index fund ETF

What is an Index Fund?

  • An Index Fund is a term used to describe investment funds that track specific indices, replicate designated indices, offering investors a strategic method for diversifying, allows individuals to own stocks aligned with the chosen index.
  • These indices serve as a comprehensive representation of opportunities in the market, each reflecting the value of available options. It is essential for investors to easily duplicate or mirror these indices by adhering to the guidelines provided by the index fund manager.
  • Presently, there are 2 main types of index funds. The first type tracks the overall market, such as VN30 and VN100, or focuses on a specific sector, like the blue-chip stock group in Vietnam.
  • Additionally, there are indices related to bonds, commodities, and currencies.

Some Notable Index Funds in the Stock Market

    1. 1. Chỉ Số S&P 500: Monitors the performance of the top 500 companies in the United States.
    2. 2. Chỉ Số Dow Jones Industrial Average (DJIA): Tracks the performance of 30 selected companies in the United States chosen by S&P Dow Jones Indices, calculated based on the weighted prices of blue-chip stocks.
    3. 3. Chỉ Số Nasdaq 100: Tracks the performance of the 100 largest and most actively traded stocks on the Nasdaq stock exchange.
    4. 4. Chỉ Số NYSE Composite: Tracks the performance of all stocks traded on the New York Stock Exchange (NYSE). Calculated based on modified market capitalization weighting.
    5. 5. Chỉ Số Russell 2000: Measures the performance of 2,000 companies with small market capitalization.

What is Index ETF? 

  • An Index ETF (Exchange-Traded Fund) is a type of investment fund that primarily mirrors stock market indices. This is a versatile investment tool, earning profits from the overall market or a specific market segment that the ETF targets, and then replicating it, after deducting associated costs.
  • Key Characteristics of Index Fund “ETF”: 
  1. 1. Flexibility: Index ETFs offer flexibility as mainly track a wide range of market indices, allowing investors to diversify their portfolios effectively.
  2. 2. Profit Gain: These funds capitalize on market movements or specific segments, providing investors with the opportunity to gain profits.
  3. 3. Replication: Index ETFs aim to replicate the performance of the targeted index, closely mimicking its ups and downs.
  • The globally favoured Index Fund is commonly represented by ETFs that replicate stock indices. ETFs function akin to standard stocks, as they are openly traded and listed on stock exchanges, providing investors with a clear and easily accessible investment option.

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