Indexed Mutual FundsIn a world of complex investment products, one of the easiest to understand can also suit a variety of individual financial goals. Whether an investment is suitable depends on personal goals, but many individual and institutional investors have turned to index investing, a strategy that attempts to approximate the performance of a broad market index. While an index investment strategy began in the early 1970s in the United States, when large institutional investors used it as an inexpensive way to achieve competitive long-term performance for their retirement and retirement programs. other investment programs. The concept of index funds was pioneered by Vanguard Funds. More recently, index funds have gained popularity among individual investors as a relatively conservative approach to stock market investing. Investment professionals emphasize the importance of including stocks in any long-term individual strategy because of their historically better performance relative to other investments and inflation. Most investors believe that stocks are "efficiently priced," meaning their prices reflect all relevant information, so it is difficult to consistently outperform the market through active management. Therefore, a mutual fund that seeks to mirror the market rather than beat it can be a simple and cost-effective way to gain broad exposure to stocks. By definition, index mutual funds cannot outperform the market. However, the funds also cannot give you the same returns as the stock index they track. Because there are certain fees and expenses associated with index funds. In 1884, Charles H. Dow, first editor of the Wall Street Journal and founder of the Dow Jones Company, pioneered the concept of measuring the performance of a stock market with an index of stocks by calculating an average which was the predecessor of the Dow Jones Industrial Average. Over the years, a large number of indexes have developed, including the Standard & Poor's 500 stock index, created in 1957. Today, most of the money invested in index funds follows the S&P index. 500. Known as the standard for measuring the performance of the U.S. large-cap stock market, this index includes a representative sample of large companies in leading industries. It is a market value-weighted index and the weight of each stock in the index is proportional to its market value. The S&P 500 is used by 97% of U.S. money managers and retirement plan sponsors. This represents approximately 80% of the total market value of all U.S. common stocks. More than $1 trillion is indexed to the S&P 500.