Concept

Index fund

A mutual fund or ETF that holds the stocks or bonds in an index, like the S&P 500, instead of picking them. Costs are usually low because no one is choosing investments.

Why we track it

Index funds are how most people own the market. What they hold, and how it is weighted, decides what the market actually did for them.

Asset allocationHow a portfolio is split among kinds of investments, such as stocks, bonds and cash.
BacktestingTesting an investing rule on historical data to see how it would have performed before putting money behind it.
Basis pointOne hundredth of a percentage point (0.01%), often written bp.
Bear marketA fall of roughly 20% or more from a recent peak, usually over several months.
Bull marketA long stretch of rising prices across a market, often dated from a 20% rise off a low.
Business cycle stagesThe economy’s long rise and fall: years of growth, a slowdown, sometimes a recession, then recovery.

Why we track it

Related terms