---
title: "Index fund"
description: "An index fund aims to replicate the return of a specified market index rather than beat it, and can be either a listed ETF or a traditional unlisted fund dealt at NAV."
canonical: https://fundfactsapi.com/glossary/index-fund
published: 2026-09-04
updated: 2026-09-04
publisher: FundFacts API
---

# Index fund (Passive fund, Tracker fund, Index tracker, Passive investing)

> An index fund aims to replicate the return of a specified market index rather than beat it, and can be either a listed ETF or a traditional unlisted fund dealt at NAV.

## Definition

An **index fund** is a fund whose objective is to match the performance of a stated index, such as the FTSE All-World or the S&P 500, as closely as possible after costs. Holdings are determined by the index rules, not by a manager's views. Index funds come in two wrappers: [ETFs](https://fundfactsapi.com/glossary/etf), which are listed and trade intraday, and traditional index funds, which are bought and sold once a day at [NAV](https://fundfactsapi.com/glossary/nav) through a platform or the fund house.

## Why it matters

Because index funds do not pay for stock selection, their ongoing charges are generally low, and their behaviour is predictable: the return should equal the index return minus costs. That makes [tracking difference](https://fundfactsapi.com/glossary/tracking-difference) and [tracking error](https://fundfactsapi.com/glossary/tracking-error) the key quality measures rather than outperformance. They are the building blocks of most robo-advisers and model portfolios.

## In the API

`profile.kind` identifies index funds, `benchmarkName` gives the index, `structure` shows the wrapper and `headlineMetrics.ter` the cost. Example values:

```json
{
  "profile": { "kind": "index" },
  "benchmarkName": "FTSE All-World Index",
  "structure": "UCITS ETF",
  "headlineMetrics": { "ter": 0.22 }
}
```

Comparing `calendarReturns.fund` with `calendarReturns.benchmark` year by year gives the realised tracking difference.

## Common pitfalls

Not every fund with an index in its name is an index fund; many active funds reference an index as a comparator. "Smart beta" or factor funds follow rules-based indices that differ markedly from the parent market index. Index funds can also replicate physically or synthetically; see [replication method](https://fundfactsapi.com/glossary/replication-method).

## In the FundFacts API payload

- `profile.kind`
- `benchmarkName`
- `structure`
- `headlineMetrics.ter`

## About FundFacts API

FundFacts turns any fund or ETF ISIN into one dated factsheet (fees and KID costs, the 1–7 risk indicator, holdings, sector and country exposure, returns) read from the fund house's own documents: as a client-ready PDF under your firm's name for advisers and wealth managers, as JSON through its API for developers, or inside ChatGPT and Claude through its MCP server.

FundFacts works inside ChatGPT and Claude as a connector (a remote MCP server): ask about any fund or ETF by ISIN, ticker or name and the assistant answers from FundFacts' dated figures, fees, risk, holdings, exposure and returns, with fund cards, side-by-side comparisons, holdings overlap and portfolio look-through.

- Free API key, no card: https://fundfactsapi.com/signup
- Documentation: https://fundfactsapi.com/docs (OpenAPI: https://fundfactsapi.com/openapi.json)
- MCP server: https://fundfactsapi.com/api/mcp (set-up for every client: https://fundfactsapi.com/mcp-server)
- Pricing: https://fundfactsapi.com/pricing
- Site index for AI assistants: https://fundfactsapi.com/llms.txt
- Informational data, not investment advice.