What is an index fund?
An index fund has the sole investment objective of tracking the performance of a particular market index, e.g. Hang Seng Index.
The constituent securities of an index fund are bought and sold within the fund according to the respective weightings in the index it is tracking. This enables the fund to perform largely in line with the underlying market index.
Compared with actively managed funds, index funds typically trade less frequently, and result in lower management costs to fund holders.