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Best index funds in October 2021

Index funds are popular with investors because they promise ownership of a wide variety of stocks, greater diversification and lower risk – usually all at a low price. That’s why many investors, especially beginners, find index funds to be superior investments to individual stocks.

Among the best are index funds based on the Standard & Poor’s 500 Index (S&P 500). The index includes hundreds of the largest, globally diversified American companies across every industry, making it a relatively low-risk way to invest in stocks. Of course, as 2020 showed, even the whole market can fluctuate dramatically, especially if something momentous happens.

This index is the very definition of the market, and by owning a fund based on the index, you’ll get the market’s return, historically about 10 percent per year. It’s among the most popular indexes.

Here’s everything you need to know about index funds, including five of the top index funds to consider adding to your portfolio this year.

Best index funds for October 2021

The list below includes S&P 500 index funds from a variety of companies, and it includes some of the lowest-cost funds trading on the public markets. When it comes to an index fund like this, one of the most important factors in your total return is cost. Included are two mutual funds and three ETFs:

1. Fidelity ZERO Large Cap Index

2. Vanguard S&P 500 ETF

3. SPDR S&P 500 ETF Trust

4. iShares Core S&P 500 ETF

5. Schwab S&P 500 Index Fund

1. Fidelity ZERO Large Cap Index (FNILX)

The Fidelity ZERO Large Cap Index mutual fund is part of the investment company’s foray into mutual funds with no expense ratio, thus its ZERO moniker. The fund doesn’t officially track the S&P 500 – technically it follows the Fidelity U.S. Large Cap Index – but the difference is academic. The real difference is that investor-friendly Fidelity doesn’t have to cough up a licensing fee to use the S&P name, keeping costs lower for investors.

Expense ratio: 0 percent. That means every $10,000 invested would cost $0 annually.

2. Vanguard S&P 500 ETF (VOO)

As its name suggests, the Vanguard S&P 500 tracks the S&P 500 index, and it’s one of the largest funds on the market with hundreds of billions in the fund. This ETF began trading in 2010, and it’s backed by Vanguard, one of the powerhouses of the fund industry.

Expense ratio: 0.03 percent. That means every $10,000 invested would cost $3 annually.

3. SPDR S&P 500 ETF Trust (SPY)

The SPDR S&P 500 ETF is the granddaddy of ETFs, having been founded all the way back in 1993. It helped kick off the wave of ETF investing that has become so popular today. With hundreds of billions in the fund, it’s among the most popular ETFs. The fund is sponsored by State Street Global Advisors — another heavyweight in the industry — and it tracks the S&P 500.

Expense ratio: 0.09 percent. That means every $10,000 invested would cost $9 annually.

4. iShares Core S&P 500 ETF (IVV)

The iShares Core S&P 500 ETF is a fund sponsored by one of the largest fund companies, BlackRock. This iShares fund is one of the largest ETFs and like these other large funds, it tracks the S&P 500. With an inception date of 2000, this fund is another long-tenured player that’s tracked the index closely over time.

Expense ratio: 0.03 percent. That means every $10,000 invested would cost $3 annually.

5. Schwab S&P 500 Index Fund (SWPPX)

With tens of billions in assets, the Schwab S&P 500 Index Fund is on the smaller side of the heavyweights on this list, but that’s not really a concern for investors. This mutual fund has a strong record dating back to 1997, and it’s sponsored by Charles Schwab, one of the most respected names in the industry. Schwab is especially noted for its focus on making investor-friendly products, as evidenced by this fund’s razor-thin expense ratio.

Expense ratio: 0.02 percent. That means every $10,000 invested would cost $2 annually.

Why are index funds so popular?

The S&P 500 index fund continues to be among the most popular index funds. S&P 500 funds offer a good return over time, they’re diversified and a relatively low-risk way to invest in stocks.

  • Attractive returns – Like all stocks, the S&P 500 will fluctuate. But over time the index has returned about 10 percent annually. That doesn’t mean index funds make money every year, but over long periods of time that’s been the average return.
  • Diversification – Investors like index funds because they offer immediate diversification. With one purchase, investors can own a wide swath of companies. One share of an index fund based on the S&P 500 provides ownership in hundreds of companies.
  • Lower risk – Because they’re diversified, investing in an index fund is lower risk than owning a few individual stocks. That doesn’t mean you can’t lose money or that they’re as safe as a CD, for example, but the index will usually fluctuate a lot less than an individual stock.
  • Low cost – Index funds can charge very little for these benefits, with a low expense ratio. For larger funds you may pay $3 to $10 per year for every $10,000 you have invested. In fact, one fund (listed above) charges you no expense ratio at all. When it comes to index funds, cost is one of the most important factors in your total return.

While some funds such as S&P 500 index funds allow you to own companies across industries, others own only a specific industry, country or even investing style (say, dividend stocks).

How to invest in an index fund in 3 easy steps

It’s surprisingly easy to invest in an index fund, but you’ll want to know what you’re investing in, not simply buy random funds that you know little about.

1. Choose an index fund to invest in

Your first step is finding what you want to invest in. While an S&P 500 index fund is the most popular index fund, they also exist for different industries, countries and even investment styles. So you need to consider what exactly you want to invest in and why it might hold opportunity:

  • Location: Consider the geographic location of the investments. A broad index such as the S&P 500 owns American companies, while other index funds might focus on a narrower location (France) or an equally broad one (Asia-Pacific).
  • Business: Which industry or industries is the index fund investing in? Is it invested in pharma companies making new drugs, or maybe tech companies? Some funds specialize in certain industries and avoid others.
  • Market opportunity: What opportunity does the index fund present? Is the fund buying pharma companies because they’re making the next blockbuster drug or because they’re cash cows paying dividends? Some funds invest in high-yield stocks while others want high-growth stocks.

You’ll want to carefully examine what the fund is investing in, so you have some idea of what you actually own. Sometimes the labels on an index fund can be misleading. But you can check the index’s holdings to see exactly what’s in the fund.

2. Decide which index fund to buy

After you’ve found a fund you like, you can look at other factors that may make it a good fit for your portfolio. The fund’s expenses are huge factors that could make – or cost – you tens of thousands of dollars over time.

  • Expenses: Compare the expenses of each fund you’re considering. Sometimes a fund based on a similar index can charge 20 times as much as another.
  • Taxes: For certain legal reasons, mutual funds tend to be less tax-efficient than ETFs. At the end of the year many mutual funds pay a taxable capital gains distribution, while ETFs do not.
  • Investment minimums: Many mutual funds have a minimum investment amount for your first purchase, often several thousand dollars. In contrast, many ETFs have no such rule, and your broker may even allow you to buy fractional shares with just a few dollars.

3. Purchase your index fund

After you’ve decided which fund fits in your portfolio, it’s time for the easy part – actually buying the fund. You can either buy directly from the mutual fund company or through a broker. But it’s usually easier to buy a mutual fund through a broker. And if you’re buying an ETF, you’ll need to go through your broker.

Things to consider when investing in index funds

As you’re looking at index funds, you’ll want to consider the following factors:

  • Long-run performance: It’s important to track the long-term performance of the index fund (ideally at least five to ten years of performance) to see what your potential future returns might be. Each fund may track a different index or do better than another fund, and some indexes do better than others over time. Long-run performance is your best gauge to what you might expect in the future, but it’s no guarantee, either.
  • Expense ratio: The expense ratio shows what you’re paying for the fund’s performance on an annual basis. For funds that track the same index, such as the S&P 500, it makes little sense to pay more than you have to. Other index funds may track indexes that have better long-term performance, potentially justifying a higher expense ratio.
  • Trading costs: Some brokers offer very attractive prices when you’re buying mutual funds, even more so than the same mutual fund company itself. If you’re going with an ETF, virtually all major online brokers now allow you to trade without a commission. Also, if you’re buying a mutual fund, beware of sales loads, or commissions, which can easily lop off 1 or 2 percent of your money before it’s invested. These are easy to avoid by choosing funds carefully, such as those from Vanguard and many others.
  • Fund options: Not all brokers will offer all mutual funds, however. So you’ll need to see whether your broker offers a specific fund family. In contrast, ETFs are typically available at all brokers because they’re all traded on an exchange.
  • Convenience: It may be a lot easier to go with a mutual fund that your broker offers on its platform rather than open a new brokerage account. But going with an ETF instead of a mutual fund may also allow you to sidestep this issue.

Can an index fund investor lose everything?

Putting money into any market-based investment such as stocks or bonds means that investors could lose it all if the company or government issuing the security runs into severe trouble. However, the situation is a bit different for index funds because they’re often so diversified.

An index fund usually owns at least dozens of securities and may own potentially hundreds of them, meaning that it’s highly diversified. In the case of a stock index fund, for example, every stock would have to go to zero for the index fund, and thus the investor, to lose everything. So while it’s theoretically possible to lose everything, it doesn’t happen for standard funds.

That said, an index fund could underperform and lose money for years, depending on what it’s invested in. But the odds that an index fund loses everything are very low.

What is considered a good expense ratio?

Mutual funds and ETFs have among the cheapest average expense ratios, and the figure also depends on whether they’re investing in bonds or stocks. In 2020, the average stock index mutual fund charged 0.06 percent (on an asset-weighted basis), or $6 for every $10,000 invested. The average stock index ETF charged 0.18 percent (asset-weighted), or $18 for every $10,000 invested.

Index funds tend to be much cheaper than average funds. Compare the numbers above with the average stock mutual fund (on an asset-weighted basis), which charged 0.54 percent, or the average stock ETF, which charged 0.18 percent. While the ETF expense ratio is the same in each case, the cost for mutual funds generally is higher. Many mutual funds are not index funds, and they charge higher fees to pay the higher expenses of their investment management teams.

So anything below the average should be considered a good expense ratio. But it’s important to keep these costs in perspective and realize that the difference between an expense ratio of 0.10 percent and 0.05 percent is just $5 per year for every $10,000 invested. Still, there’s no reason to pay more for an index fund tracking the same index.

Is now a good time to buy index funds?

If you’re buying a stock index fund or almost any broadly diversified stock fund such as an S&P 500 fund, it can be a good time to buy. That’s because the market tends to rise over time, as the economy grows and corporate profits increase. In this regard, time is your best friend, because it allows you to compound your money, letting your money make money. That said, narrowly diversified index funds (such as funds focused on one industry) may do poorly for years.

Investors need to take a long-term mindset, however, and experts recommend adding money to the market regularly. You’ll take advantage of dollar cost averaging and lower your risk. A strong investing discipline can help you make money in the market over time. Investors should avoid timing the market, that is, jumping in and out of the market to capture gains and dodge losses.

Index fund FAQ

If you’re looking to get into index funds, you may still have a few more questions. Here are answers to some of the most frequently asked questions that investors have about them.

How do index funds work?

An index fund is an investment fund – either a mutual fund or an exchange-traded fund (ETF) – that is based on a preset basket of stocks, or index. This index may be created by the fund manager itself or by another company such as an investment bank or a brokerage.

These fund managers then mimic the index, creating a fund that looks as much as possible like the index, without actively managing the fund. Over time the index changes, as companies are added and removed, and the fund manager mechanically replicates those changes in the fund.

Because of this approach, index funds are considered a type of passive investing, rather than active investing where a fund manager analyzes stocks and tries to pick the best performers.

This passive approach means that index funds tend to have low expense ratios, keeping them cheap for investors getting into the market.

Some of the most well-known indexes include the S&P 500, the Dow Jones Industrial Average and the Nasdaq 100. Indexing is a popular strategy for ETFs to use, and most ETFs are based on indexes.

What sort of fees are associated with index funds?

Index funds may have a couple different kinds of fees associated with them, depending on which type of index fund:

  • Mutual funds: Index funds sponsored by mutual fund companies may charge two kinds of fees: a sales load and an expense ratio.
    • A sales load is just a commission for buying the fund, and it may happen when you buy or when you sell or over time. Investors can usually avoid these by going with an investor-friendly fund company such as Vanguard, Schwab or Fidelity.
    • An expense ratio is an ongoing fee paid to the fund company based on the assets you have in the fund. Typically these are charged daily and come out of the account seamlessly.
  • ETFs: Index funds sponsored by ETF companies (many of which also run mutual funds) charge only one kind of fee, an expense ratio. It works the same way as it would with a mutual fund, with a tiny portion seamlessly deducted each day you hold the fund.

ETFs have become more popular recently because they help investors avoid some of the higher fees associated with mutual funds. ETFs are also becoming popular because they offer other key advantages over mutual funds.

Bottom line

These are some of the best S&P 500 index funds on the market, offering investors a way to own the stocks of the S&P 500 at low cost, while still enjoying the benefits of diversification and lower risk. With those benefits, it’s no surprise that these are some of the largest funds on the market.

Learn more:

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

Sours: https://www.bankrate.com/investing/best-index-funds/

Index fund

Fund representing a specific index

An index fund (also index tracker) is a mutual fund or exchange-traded fund (ETF) designed to follow certain preset rules so that the fund can track a specified basket of underlying investments.[1] While index providers often emphasize that they are for-profit organizations, index providers have the ability to act as "reluctant regulators" when determining which companies are suitable for an index.[2]: 1244–45  Those rules may include tracking prominent indexes like the S&P 500 or the Dow Jones Industrial Average or implementation rules, such as tax-management, tracking error minimization, large block trading or patient/flexible trading strategies that allow for greater tracking error but lower market impact costs. Index funds may also have rules that screen for social and sustainable criteria.

An index fund's rules of construction clearly identify the type of companies suitable for the fund. The most commonly known index fund in the United States, the S&P 500 Index Fund, is based on the rules established by S&P Dow Jones Indices for their S&P 500 Index. Equity index funds would include groups of stocks with similar characteristics such as the size, value, profitability and/or geographic location of the companies. A group of stocks may include companies from the United States, Non-US Developed, emerging markets or Frontier Market countries. Additional index funds within these geographic markets may include indexes of companies that include rules based on company characteristics or factors, such as companies that are small, mid-sized, large, small value, large value, small growth, large growth, the level of gross profitability or investment capital, real estate, or indexes based on commodities and fixed-income. Companies are purchased and held within the index fund when they meet the specific index rules or parameters and are sold when they move outside of those rules or parameters. Think of an index fund as an investment utilizing rules-based investing. Some index providers announce changes of the companies in their index before the change date whilst other index providers do not make such announcements.

The main advantage of index funds for investors is they don't require much time to manage as the investors don't have to spend time analyzing various stocks or stock portfolios. Many investors also find it difficult to beat the performance of the S&P 500 Index due to their lack of experience/skill in investing. Some legal scholars have previously suggested an value maximization and agency-costs theory for understanding index funds stewardship.[3]: 4 

One index provider, Dow Jones Indexes, has 130,000 indices. Dow Jones Indexes says that all its products are maintained according to clear, unbiased, and systematic methodologies that are fully integrated within index families.[4]

As of 2014[update], index funds made up 20.2% of equity mutual fund assets in the US. Index domestic equity mutual funds and index-based exchange-traded funds (ETFs), have benefited from a trend towards more index-oriented investment products. From 2007 through 2014, index domestic equity mutual funds and ETFs received $1 trillion in new net cash, including reinvested dividends. Index-based domestic equity ETFs have grown particularly quickly, attracting almost twice the flows of index domestic equity mutual funds since 2007. In contrast, actively managed domestic equity mutual funds experienced a net outflow of $659 billion, including reinvested dividends, from 2007 to 2014.[5]

Origins[edit]

The first theoretical model for an index fund was suggested in 1960 by Edward Renshaw and Paul Feldstein, both students at the University of Chicago. While their idea for an "Unmanaged Investment Company" garnered little support, it did start off a sequence of events in the 1960s.[6]

Qualidex Fund, Inc., a Florida Corporation, chartered on 05/23/1967 (317247) by Richard A. Beach (BSBA Banking and Finance, University of Florida, 1957) and joined by Walton D. Dutcher Jr., filed a registration statement (2-38624) with the SEC on October 20, 1970 which became effective on July 31, 1972. "The fund organized as an open-end, diversified investment company whose investment objective is to approximate the performance of the Dow Jones Industrial Stock Average", thereby becoming the first index fund.

In 1973, Burton Malkiel wrote A Random Walk Down Wall Street, which presented academic findings for the lay public. It was becoming well known in the popular financial press that most mutual funds were not beating the market indices. Malkiel wrote:

What we need is a no-load, minimum management-fee mutual fund that simply buys the hundreds of stocks making up the broad stock-market averages and does no trading from security to security in an attempt to catch the winners. Whenever below-average performance on the part of any mutual fund is noticed, fund spokesmen are quick to point out "You can't buy the averages." It's time the public could. ...there is no greater service [the New York Stock Exchange] could provide than to sponsor such a fund and run it on a nonprofit basis.... Such a fund is much needed, and if the New York Stock Exchange (which, incidentally has considered such a fund) is unwilling to do it, I hope some other institution will.[7]

John Bogle graduated from Princeton University in 1951, where his senior thesis was titled: "The Economic Role of the Investment Company".[8] Bogle wrote that his inspiration for starting an index fund came from three sources, all of which confirmed his 1951 research: Paul Samuelson's 1974 paper, "Challenge to Judgment"; Charles Ellis' 1975 study, "The Loser's Game"; and Al Ehrbar's 1975 Fortune magazine article on indexing. Bogle founded The Vanguard Group in 1974; as of 2009 it was the largest mutual fund company in the United States.[citation needed]

Bogle started the First Index Investment Trust on December 31, 1975. At the time, it was heavily derided by competitors as being "un-American" and the fund itself was seen as "Bogle's folly".[9] In the first five years of Bogle's company, it made 17 million dollars.[10]Fidelity Investments Chairman Edward Johnson was quoted as saying that he "[couldn't] believe that the great mass of investors are going to be satisfied with receiving just average returns".[11] Bogle's fund was later renamed the Vanguard 500 Index Fund, which tracks the Standard and Poor's 500 Index. It started with comparatively meager assets of $11 million but crossed the $100 billion milestone in November 1999; this astonishing increase was funded by the market's increasing willingness to invest in such a product. Bogle predicted in January 1992 that it would very likely surpass the Magellan Fund before 2001, which it did in 2000.[citation needed]

John McQuown and David G. Booth of Wells Fargo, and Rex Sinquefield of the American National Bank in Chicago, established the first two Standard and Poor's Composite Index Funds in 1973. Both of these funds were established for institutional clients; individual investors were excluded. Wells Fargo started with $5 million from their own pension fund, while Illinois Bell put in $5 million of their pension funds at American National Bank. In 1971, Jeremy Grantham and Dean LeBaron at Batterymarch Financial Management "described the idea at a Harvard Business School seminar in 1971, but found no takers until 1973. Two years later, in December 1974, the firm finally attracted its first index client."[12]

In 1981, Booth and Sinquefield started Dimensional Fund Advisors (DFA), and McQuown joined its board of directors. DFA further developed indexed-based investment strategies. Vanguard started its first bond index fund in 1986.

Frederick L. A. Grauer at Wells Fargo harnessed McQuown and Booth's indexing theories, which led to Wells Fargo's pension funds managing over $69 billion in 1989[13] and over $565 billion in 1998. In 1996, Wells Fargo sold its indexing operation to Barclays Bank of London, which it operated under the name Barclays Global Investors (BGI). Blackrock, Inc. acquired BGI in 2009; the acquisition included BGI's index fund management (both its institutional funds and its iShares ETF business) and its active management.

Economic theory[edit]

Economist Eugene Fama said, "I take the market efficiency hypothesis to be the simple statement that security prices fully reflect all available information." A precondition for this strong version of the hypothesis is that information and trading costs, the costs of getting prices to reflect information, are always 0.[14] A weaker and economically more sensible version of the efficiency hypothesis says that prices reflect information to the point where the marginal benefits of acting on information (the profits to be made) do not exceed marginal costs.[15] Economists cite the efficient-market hypothesis (EMH) as the fundamental premise that justifies the creation of the index funds. The hypothesis implies that fund managers and stock analysts are constantly looking for securities that may out-perform the market; and that this competition is so effective that any new information about the fortune of a company will rapidly be incorporated into stock prices. It is postulated therefore that it is very difficult to tell ahead of time which stocks will out-perform the market.[16] By creating an index fund that mirrors the whole market the inefficiencies of stock selection are avoided.

In particular, the EMH says that economic profits cannot be wrung from stock picking. This is not to say that a stock picker cannot achieve a superior return, just that the excess return will on average not exceed the costs of winning it (including salaries, information costs, and trading costs). The conclusion is that most investors would be better off buying a cheap index fund. Note that return refers to the ex-ante expectation; ex-post realisation of payoffs may make some stock-pickers appear successful. In addition, there have been many criticisms of the EMH.

Tracking[edit]

Tracking can be achieved by trying to hold all of the securities in the index, in the same proportions as the index. Other methods include statistically sampling the market and holding "representative" securities. Many index funds rely on a computer model with little or no human input in the decision as to which securities are purchased or sold and are thus subject to a form of passive management.

Fees[edit]

The lack of active management generally gives the advantage of much lower fees compared to actively managed mutual funds and, in taxable accounts, lower taxes. In addition it is usually impossible to precisely mirror the index as the models for sampling and mirroring, by their nature, cannot be 100% accurate. The difference between the index performance and the fund performance is called the "tracking error", or, colloquially, "jitter."

Index funds are available from many investment managers. Some common indices include the S&P 500, the Nikkei 225, and the FTSE 100. Less common indexes come from academics like Eugene Fama and Kenneth French, who created "research indexes" in order to develop asset pricing models, such as their Three Factor Model. The Fama–French three-factor model is used by Dimensional Fund Advisors to design their index funds. Robert Arnott and Professor Jeremy Siegel have also created new competing fundamentally based indexes based on such criteria as dividends, earnings, book value, and sales.

Indexing methods[edit]

Traditional indexing[edit]

Indexing is traditionally known as the practice of owning a representative collection of securities, in the same ratios as the target index. Modification of security holdings happens only periodically, when companies enter or leave the target index.

Synthetic indexing[edit]

Synthetic indexing is a modern technique of using a combination of equity index futures contracts and investments in low-risk bonds to replicate the performance of a similar overall investment in the equities making up the index. Although maintaining the future position has a slightly higher cost structure than traditional passive sampling, synthetic indexing can result in more favourable tax treatment, particularly for international investors who are subject to U.S. dividend withholding taxes. The bond portion can hold higher yielding instruments, with a trade-off of corresponding higher risk, a technique referred to as enhanced indexing.

Enhanced indexing[edit]

Enhanced indexing is a catch-all term referring to improvements to index fund management that emphasize performance, possibly using active management. Enhanced index funds employ a variety of enhancement techniques, including customized indexes (instead of relying on commercial indexes), trading strategies, exclusion rules, and timing strategies. The cost advantage of indexing could be reduced or eliminated by employing active management. Enhanced indexing strategies help in offsetting the proportion of tracking error that would come from expenses and transaction costs. These enhancement strategies can be:

  • Lower cost, issue selection, yield curve positioning.
  • Sector and quality positioning and call exposure positioning.

Advantages[edit]

Low costs[edit]

Because the composition of a target index is a known quantity, relative to actively managed funds, it costs less to run an index fund.[1] Typically expense ratios of an index fund range from 0.10% for U.S. Large Company Indexes to 0.70% for Emerging Market Indexes. The expense ratio of the average large cap actively managed mutual fund as of 2015 is 1.15%.[17] If a mutual fund produces 10% return before expenses, taking account of the expense ratio difference would result in an after expense return of 9.9% for the large cap index fund versus 8.85% for the actively managed large cap fund.

Simplicity[edit]

The investment objectives of index funds are easy to understand. Once an investor knows the target index of an index fund, what securities the index fund will hold can be determined directly. Managing one's index fund holdings may be as easy as rebalancing[clarify] every six months or every year.

Lower turnovers[edit]

Turnover refers to the selling and buying of securities by the fund manager. Selling securities in some jurisdictions may result in capital gains tax charges, which are sometimes passed on to fund investors. Even in the absence of taxes, turnover has both explicit and implicit costs, which directly reduce returns on a dollar-for-dollar basis. Because index funds are passive investments, the turnovers are lower than actively managed funds.

No style drift[edit]

Style drift occurs when actively managed mutual funds go outside of their described style (i.e., mid-cap value, large cap income, etc.) to increase returns. Such drift hurts portfolios that are built with diversification as a high priority. Drifting into other styles could reduce the overall portfolio's diversity and subsequently increase risk. With an index fund, this drift is not possible and accurate diversification of a portfolio is increased.

Disadvantages[edit]

Losses to arbitrageurs[edit]

Index funds must periodically "rebalance" or adjust their portfolios to match the new prices and market capitalization of the underlying securities in the stock or other indexes that they track.[18][19] This allows algorithmic traders (80% of the trades of whom involve the top 20% most popular securities[18]) to perform index arbitrage by anticipating and trading ahead of stock price movements caused by mutual fund rebalancing, making a profit on foreknowledge of the large institutional block orders.[20][21] This results in profits transferred from investors to algorithmic traders, estimated to be at least 21 to 28 basis points annually for S&P 500 index funds, and at least 38 to 77 basis points per year for Russell 2000 funds.[22] In effect, an index, and consequently, all funds tracking an index are announcing ahead of time the trades that they are planning to make, allowing value to be siphoned by arbitrageurs, in a legal practice known as "index front running".[23][24] Algorithmic high-frequency traders all have advanced access to the index re-balancing information, and spend large sums on fast technology to compete against each other to be the first—often by a few microseconds—to make these arbitrages.[dubious – discuss]

John Montgomery of Bridgeway Capital Management says that the resulting "poor investor returns" from trading ahead of mutual funds is "the elephant in the room" that "shockingly, people are not talking about."[25] Related "time zone arbitrage" against mutual funds and their underlying securities traded on overseas markets is likely "damaging to financial integration between the United States, Asia and Europe."[26]

Common market impact[edit]

One problem occurs when a large amount of money tracks the same index. According to theory, a company should not be worth more when it is in an index. But due to supply and demand, a company being added can have a demand shock, and a company being deleted can have a supply shock, and this will change the price.[27][28] This does not show up in tracking error since the index is also affected. A fund may experience less impact by tracking a less popular index.[29][30]

Possible tracking error from index[edit]

Since index funds aim to match market returns, both under- and over-performance compared to the market is considered a "tracking error". For example, an inefficient index fund may generate a positive tracking error in a falling market by holding too much cash, which holds its value compared to the market.

According to The Vanguard Group, a well-run S&P 500 index fund should have a tracking error of 5 basis points or less, but a Morningstar survey found an average of 38 basis points across all index funds.[31]

Diversification[edit]

Main article: Diversification (finance)

Diversification refers to the number of different securities in a fund. A fund with more securities is said to be better diversified than a fund with smaller number of securities. Owning many securities reduces volatility by decreasing the impact of large price swings above or below the average return in a single security. A Wilshire 5000 index would be considered diversified, but a bio-tech ETF would not.[32]

Since some indices, such as the S&P 500 and FTSE 100, are dominated by large company stocks, an index fund may have a high percentage of the fund concentrated in a few large companies. This position represents a reduction of diversity and can lead to increased volatility and investment risk for an investor who seeks a diversified fund.[33]

Some advocate adopting a strategy of investing in every security in the world in proportion to its market capitalization, generally by investing in a collection of ETFs in proportion to their home country market capitalization.[34] A global indexing strategy may have lower variance in returns than one based only on home market indexes, because there may be less correlation between the returns of companies operating in different markets than between companies operating in the same market.

Asset allocation and achieving balance[edit]

Main article: Asset allocation

Asset allocation is the process of determining the mix of stocks, bonds and other classes of investable assets to match the investor's risk capacity, which includes attitude towards risk, net income, net worth, knowledge about investing concepts, and time horizon. Index funds capture asset classes in a low-cost and tax-efficient manner and are used to design balanced portfolios.

A combination of various index mutual funds or ETFs could be used to implement a full range of investment policies from low to high risk.

Pension investment in index funds[edit]

Research conducted by the World Pensions Council (WPC) suggests that up to 15% of overall assets held by large pension funds and national social security funds are invested in various forms of passive strategies including index funds, as opposed to the more traditional actively managed that still constitute the largest share of institutional investments[35] The proportion invested in passive funds varies widely across jurisdictions and fund type.[35][36]

The relative appeal of index funds, ETFs and other index-replicating investment vehicles has grown rapidly[37] for various reasons ranging from disappointment with underperforming actively managed mandates[35] to the broader tendency towards cost reduction across public services and social benefits that followed the 2008-2012 Great Recession.[38] Public-sector pensions and national reserve funds have been among the early adopters of index funds and other passive management strategies.[36][38]

Comparison of index funds with index ETFs[edit]

In the United States, mutual funds price their assets by their current value every business day, usually at 4:00 p.m. Eastern time, when the New York Stock Exchange closes for the day.[39] Index ETFs, in contrast, are priced during normal trading hours, usually 9:30 a.m. to 4:00 p.m. Eastern time. Index ETFs are also sometimes weighted by revenue rather than market capitalization.[40]

[edit]

[edit]

Typically mutual funds supply the correct tax reporting documents for only one country, which can cause tax problems for shareholders citizen to or resident of another country, either now or in the future.

Implications for US investors[edit]

US citizens/taxpayers living at home or abroad should particularly consider whether their investment in an ex-US fund (meaning the fund is administered by a foreign investment company) not providing annual 1099 forms (which report distributed income and capital gains/losses) or annual PFIC annual information statements will be subject to punitive US taxation under section 1291 of the US tax code. Note that if a PFIC annual information statement is provided, a careful filing of form 8621 is required to avoid punitive US taxation.[41][42]

[edit]

U.S. mutual funds are required by law to distribute realized capital gains to their shareholders. If a mutual fund sells a security for a gain, the capital gain is taxable for that year; similarly a realized capital loss can offset any other realized capital gains.

Scenario: An investor entered a mutual fund during the middle of the year and experienced an overall loss for the next six months. The mutual fund itself sold securities for a gain for the year, therefore must declare a capital gains distribution. The IRS would require the investor to pay tax on the capital gains distribution, regardless of the overall loss.

A small investor selling an ETF to another investor does not cause a redemption on ETF itself; therefore, ETFs are more immune to the effect of forced redemption causing realized capital gains.

See also[edit]

References[edit]

  1. ^ abReasonable Investor(s), Boston University Law Review, available at: https://ssrn.com/abstract=2579510
  2. ^Hirst, Scott; Kastiel, Kobi (2019-05-01). "Corporate Governance by Index Exclusion". Boston University Law Review. 99 (3): 1229.
  3. ^Hirst, Scott (2019-09-01). "Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy". ECGI - Law Working Paper. 433/2018.
  4. ^S&P Dow Jones Indices
  5. ^"2014 Investment Company Fact Book". Archived from the original on 2016-06-20. Retrieved 2014-11-05.
  6. ^Fox, Justin (2011). "Chapter 7: Jack Bogle takes on the performance cult (and wins)". The Myth of the Rational Market. USA: HarperCollins. pp. 111–112. ISBN .
  7. ^Burton Malkiel (1973). A Random Walk Down Wall Street. W. W. Norton. pp. 226–7. ISBN .
  8. ^Bogle, John (1950–1951). "Senior Thesis,"The Economic Role of the Investment Company"". Princeton University Library.
  9. ^Bogle, John (2006). "The First Index Mutual Fund: A History of Vanguard Index Trust and the Vanguard Index Strategy". Bogle Financial Center. Archived from the original on 2013-05-07. Retrieved 2007-08-04.
  10. ^"The Economist - World News, Politics, Economics, Business & Finance". The Economist. Retrieved 2019-02-04.
  11. ^Ferri, Richard (2006-12-22). "All About Index Funds". McGraw-Hill. ISBN .
  12. ^Bogle, John (1999). Common Sense on Mutual Funds.
  13. ^"How This Man Manages $69 Billion". Fortune. 1989.
  14. ^Grossman and Stiglitz (1980)
  15. ^Jensen (1978)
  16. ^Burton G. Malkiel, A Random Walk Down Wall Street, W. W. Norton, 1996, ISBN 0-393-03888-2
  17. ^Index Fund Advisors
  18. ^ ab"High-Frequency Firms Tripled Trades in Stock Rout, Wedbush Says". Bloomberg/Financial Advisor. August 12, 2011. Retrieved 26 March 2013.
  19. ^Siedle, Ted (March 25, 2013). "Americans Want More Social Security, Not Less". Forbes. Retrieved 26 March 2013.
  20. ^Amery, Paul (November 11, 2010). "Know Your Enemy". IndexUniverse.eu. Retrieved 26 March 2013.
  21. ^Salmon, Felix (July 18, 2012). "What's driving the Total Return ETF?". Reuters. Archived from the original on July 20, 2012. Retrieved 26 March 2013.
  22. ^Petajisto, Antti (2011). "The index premium and its hidden cost for index funds"(PDF). Journal of Empirical Finance. 18 (2): 271–288. doi:10.1016/j.jempfin.2010.10.002. Retrieved 26 March 2013.
  23. ^"Understanding index front running". The Trade Magazine. The TRADE Ltd. Archived from the original on 2008-10-23. Retrieved 2009-03-24.
  24. ^"The Hugely Profitable, Wholly Legal Way to Game the Stock Market". Bloomberg.com. 7 July 2015.
  25. ^Rekenthaler, John (February–March 2011). "The Weighting Game, and Other Puzzles of Indexing"(PDF). Morningstar Advisor. pp. 52–56. Archived from the original(PDF) on 29 July 2013. Retrieved 26 March 2013.
  26. ^Donnelly, Katelyn Rae; Edward Tower (2009). "Chapter VIII. Time-zone arbitrage in United States mutual funds: Damaging to financial integration between the United States, Asia and Europe?"(PDF). Challenges and Opportunities for Trade and Financial Integration in Asia and the Pacific. Studies in Trade and Investment 67. New York: United Nations Economic and Social Commission for Asia and the Pacific. pp. 134–165. ISSN 1020-3516.
  27. ^"Market Reactions to Changes in the S&P 500 Index: An Industry Analysis"(PDF). Retrieved 2014-07-30.
  28. ^"The Price Response to S&P 500 Index Additions and Deletions: Evidence of Asymmetry and a New Explanation"(PDF). Archived from the original(PDF) on 2014-06-06. Retrieved 2014-07-30.
  29. ^Small-Cap Indexing: Popularity Can Be a Pain
  30. ^Arvedlund, Erin E. (2006-04-03). "Keeping Costs Down - Barron's". Online.barrons.com. Retrieved 2014-07-30.
  31. ^Tergesen, Anne; Young, Lauren (2004-04-19). "Index Funds Aren't All Equal". BusinessWeek. McGraw-Hill Companies. Retrieved 2007-02-20.
  32. ^Bogle, John C. (2004-04-13). "As The Index Fund Moves from Heresy to Dogma . . . What More Do We Need To Know?". The Gary P. Brinson Distinguished Lecture. Bogle Financial Center. Archived from the original on 2007-03-13. Retrieved 2007-02-20.
  33. ^"Practice Essentials - Equal Weight Indexing"(PDF). S&P Dow Jones Indices.
  34. ^Gale, Martin. "Building a Globally Efficient Equity Portfolio with Exchange Traded Funds". Archived from the original on 2018-11-16. Retrieved 2008-01-08.
  35. ^ abcRachael Revesz (27 November 2013). "Why Pension Funds Won't Allocate 90 Percent To Passives". Journal of Indexes. Retrieved June 7, 2014.
  36. ^ abChris Flood (11 May 2014). "Alarm Bells Ring for Active Fund Managers". FT. Retrieved June 7, 2014.
  37. ^Mike Foster (6 June 2014). "Institutional Investors Look to ETFs". Financial News. Archived from the original on 15 July 2014. Retrieved June 7, 2014.
  38. ^ abRachael Revesz (7 May 2014). "UK Govt. Leading Way For Pensions Using Passives". Journal of Indexes - ETF.com. Retrieved June 7, 2014.
  39. ^"Frequently Asked Questions About Mutual Fund Share Pricing". Investment Company Institute. Archived from the original on October 26, 2008. Retrieved 2009-03-24.
  40. ^"ETFs". Retrieved 2013-05-09.
  41. ^Gianni, Monica (2014). "PFICs Gone Wild". Akron Tax J. 29.
  42. ^"Instructions for US form 8621".
  • John Bogle, Bogle on Mutual Funds: New Perspectives for the Intelligent Investor, Dell, 1994, ISBN 0-440-50682-4
  • Mark T. Hebner, Foreword by Harry Markowitz, Index Funds: The 12-Step Recovery Program for Active Investors, IFA Publishing; Updated and Revised, 2015, ISBN 0976802317
  • Taylor Larimore, Mel Lindauer, Michael LeBoeuf, The Bogleheads' Guide to Investing, Wiley, 2006, ISBN 0-471-73033-5
  • From Berkshire Hathaway 2004 Annual Report; see Wikiquotes for text.

External links[edit]

Sours: https://en.wikipedia.org/wiki/Index_fund
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Index mutual funds

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Barclays, Bloomberg Finance L.P., Cohen & Steers Capital Management, Inc., European Public Real Estate Association (“EPRA® ”), FTSE International Limited (“FTSE”), India Index Services & Products Limited, Interactive Data, JPMorgan Chase & Co., Japan Exchange Group, MSCI Inc., Markit Indices Limited, Morningstar, Inc., The NASDAQ OMX Group, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Russell or S&P Dow Jones Indices LLC. None of these companies make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with the companies listed above.

Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Equity REITS Index, FTSE NAREIT All Residential Capped Index or FTSE NAREIT All Mortgage Capped Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Developed Real Estate ex-U.S. Index, FTSE EPRA/NAREIT Developed Europe Index or FTSE EPRA/NAREIT Global REIT Index; all rights vest in FTSE, NAREIT and EPRA.“FTSE®” is a trademark of London Stock Exchange Group companies and is used by FTSE under license.

Sours: https://www.blackrock.com/us/individual/education/mutual-funds/index-mutual-funds
This Is How To Become A Millionaire: Index Fund Investing for Beginners

Index Fund

What Is an Index Fund?

An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets. 

Index funds are generally considered ideal core portfolio holdings for retirement accounts, such as individual retirement accounts (IRAs) and 401(k) accounts. Legendary investor Warren Buffett has recommended index funds as a haven for savings for the later years of life. Rather than picking out individual stocks for investment, he has said, it makes more sense for the average investor to buy all of the S&P 500 companies at the low cost an index fund offers.

Key Takeaways

  • An index fund is a portfolio of stocks or bonds designed to mimic the composition and performance of a financial market index.
  • Index funds have lower expenses and fees than actively managed funds.
  • Index funds follow a passive investment strategy.
  • Index funds seek to match the risk and return of the market, on the theory that in the long term, the market will outperform any single investment.

John Bogle on Starting World's First Index Fund

How an Index Fund Works

"Indexing" is a form of passive fund management. Instead of a fund portfolio manager actively stock picking and market timing—that is, choosing securities to invest in and strategizing when to buy and sell them—the fund manager builds a portfolio whose holdings mirror the securities of a particular index. The idea is that by mimicking the profile of the index—the stock market as a whole, or a broad segment of it—the fund will match its performance as well.

There is an index, and an index fund, for nearly every financial market in existence. In the U.S., the most popular index funds track the S&P 500. But several other indexes are widely used as well, including:

  • Russell 2000, made up of small-cap company stocks
  • Wilshire 5000 Total Market Index, the largest U.S. equities index
  • MSCI EAFE, consisting of foreign stocks from Europe, Australasia, and the Far East
  • Bloomberg Barclays US Aggregate Bond Index, which follows the total bond market
  • Nasdaq Composite, made up of 3,000 stocks listed on the Nasdaq exchange
  • Dow Jones Industrial Average (DJIA), consisting of 30 large-cap companies

An index fund tracking the DJIA, for example, would invest in the same 30 large and publicly owned companies that comprise that index.

Portfolios of index funds substantially only change when their benchmark indexes change. If the fund is following a weighted index, its managers may periodically rebalance the percentage of different securities to reflect the weight of their presence in the benchmark. Weighting is a method used to balance out the influence of any single holding in an index or a portfolio.

Many index ETFs replicate market indexes in much the same way as index mutual funds do, and they may be more liquid and/or cost-effective for some investors.

Index Funds vs. Actively Managed Funds

Investing in an index fund is a form of passive investing. The opposite strategy is active investing, as realized in actively managed mutual funds—the ones with the securities-picking, market-timing portfolio manager described above.

Lower Costs

One primary advantage that index funds have over their actively managed counterparts is the lower management expense ratio. A fund's expense ratio—also known as the management expense ratio—includes all of the operating expenses such as the payment to advisors and managers, transaction fees, taxes, and accounting fees.

Since the index fund managers are simply replicating the performance of a benchmark index, they do not need the services of research analysts and others that assist in the stock-selection process. Managers of index funds trade holdings less often, incurring fewer transaction fees and commissions. In contrast, actively managed funds have larger staffs and conduct more transactions, driving up the cost of doing business.

The extra costs of fund management are reflected in the fund's expense ratio and get passed on to investors. As a result, cheap index funds often cost less than a percent—0.2%-0.5% is typical, with some firms offering even lower expense ratios of 0.05% or less—compared to the much higher fees actively managed funds command, typically 1% to 2.5%.

Expense ratios directly impact the overall performance of a fund. Actively managed funds, with their often-higher expense ratios, are automatically at a disadvantage to index funds, and struggle to keep up with their benchmarks in terms of overall return.

If you have an online brokerage account, check its mutual fund or ETF screener to see which index funds are available to you.

Pros
  • Ultimate in diversification

  • Low expense ratios

  • Strong long-term returns

  • Ideal for passive, buy-and-hold investors

Cons
  • Vulnerable to market swings, crashes

  • Lack of flexibility

  • No human element

  • Limited gains

Better Returns?

Lowered expense leads to better performance. Advocates argue that passive funds have been successful in outperforming most actively managed mutual funds. A majority of mutual funds indeed fail to beat their benchmark or broad market indexes. For instance, during the five years ending December 31, 2020, approximately 75% of large-cap U.S. funds generated a return less than the S&P 500, according to SPIVA Scorecard data from S&P Dow Jones Indices.

On the other hand, passively managed funds do not attempt to beat the market. Their strategy instead seeks to match the overall risk and return of the market—on the theory that the market always wins.

Passive management leading to positive performance tends to be true over the long term. With shorter timespans, active mutual funds do better. The SPIVA Scorecard indicates that in a span of one year, only about 60% of large-cap mutual funds underperformed the S&P 500. In other words, approximately two-fifths of them beat it in the short term. Also, in other categories, actively managed money rules. As an example, over 86% of mid-cap mutual funds beat their S&P MidCap 400 Growth Index benchmark in the course of a year.

Real-World Example of Index Funds

Index funds have been around since the 1970s. The popularity of passive investing, the appeal of low fees, and a long-running bull market have combined to send them soaring in the 2010s. For 2020, according to Morningstar Research, investors poured more than $400 billion into index funds across all asset classes. For the same period, actively managed funds experienced $188 billion in outflows.

The one fund that started it all, founded by Vanguard chair John Bogle in 1976, remains one of the best for its overall long-term performance and low cost. The Vanguard 500 Index Fund has tracked the S&P 500 faithfully, in composition and performance. For its Admiral Shares, it posts an average annual return of 7.84%, vs. the index's 7.86%, as of June 2021, for example. The expense ratio is 0.04%, and its minimum investment is $3,000.

What Is an Index Fund?

An index mutual fund is an investment product that aims to match, rather than exceed, the performance of an underlying index. Examples of the kinds of indexes tracked by index funds include the Standard & Poor’s 500 Index, better known as the S&P 500, or the Dow Jones Industrial Average (DJIA). Index funds have grown in popularity in recent years, as a growing number of investors have adopted passive investing strategies. One of their main strengths is the low fees that they charge relative to active investment funds.

How Do Index ETFs Work?

Index funds may also be structured as exchange-traded funds (ETFs). These products are essentially portfolios of stocks that are managed by a professional financial firm, in which each share represents a small ownership stake in the entire portfolio. For index funds, the goal of the financial firm is not to outperform the underlying index but simply to match its performance. If, for example, a particular stock makes up 1% of the index, then the firm managing the index fund will seek to mimic that same composition by making 1% of its portfolio consist of that stock.

Do Index Funds Have Fees?

Yes, index funds have fees, but they are generally much lower than competing products. Many index funds offer fees of less than 0.20%, whereas active funds often charge fees of over 1.00%. This difference in fees can have a large effect on investors’ returns when compounded over long timeframes. This is one of the main reasons why index funds have become such a popular investment option in recent years.

Sours: https://www.investopedia.com/terms/i/indexfund.asp

Index fund e equity

Strategy

Investment Objective

The fund seeks to track the performance of a benchmark index that measures the investment return of large-capitalization U.S. stocks.

Morningstar Equity Style

Large Blend

Data as of 09/30/2021

Morningstar Rating

PeriodRatingFunds In Category (Large Blend)
Overall1,257
3 Years1,257
5 Years1,102
10 Years812

Average Annual Total Returns (Investor Class)

1 YR
29.80%29.80%
Benchmark
30.00%30.00%
Value
-0.20%-0.20%

Data as of 09/30/2021

Data as of 09/30/2021

3 YR
15.78%15.78%
Benchmark
15.99%15.99%
Value
-0.21%-0.21%

Data as of 09/30/2021

Data as of 09/30/2021

5 YR
16.66%16.66%
Benchmark
16.90%16.90%
Value
-0.24%-0.24%

Data as of 09/30/2021

Data as of 09/30/2021

10 YR
16.37%16.37%
Benchmark
16.63%16.63%
Value
-0.26%-0.26%

Data as of 09/30/2021

Data as of 09/30/2021

Benchmark: S&P 500 Index

Fund Inception: 03/30/1990

Expense Ratio

Gross
0.18%

Net
0.18%

Current Year Performance (Investor Class)

Daily YTD
17.34%
Benchmark
17.49%
Value
-0.15%

Data as of 10/13/2021

Monthly YTD
15.78%
Benchmark
15.92%
Value
-0.14%

Data as of 09/30/2021

One Month
-4.66%
Benchmark
-4.65%
Value
-0.01%

Data as of 09/30/2021

Three Months
0.54%
Benchmark
0.58%
Value
-0.04%

Data as of 09/30/2021

Benchmark: S&P 500 Index

Fund Inception: 03/30/1990

Asset Allocation

Net Assets
(USD)
$32.5b

LargestUS Stock99.40%$32.3b

OtherView complete

Holdings

Total
Holdings
505

Largest HoldingApple5.89%Was (03/31/2021)5.72%

OtherView complete Full Holdings

Top 10 Holdings28.52%View the latest Top 10 Holdings

12-Month Portfolio Turnover4.2%Data as of 09/30/2021

Purchase

NVIDIA
1.36%

Was0.98%

Sale

JPMorgan Chase
1.28%

Was1.38%

Data as of 06/30/2021

Sectors

Total
Sectors
11

Largest SectorInformation Technology27.52%Was (08/31/2021)27.86%

OtherView complete

Under

Information Technology
By -0.12%

Fund27.52%

Benchmark27.63%

Data as of 09/30/2021

Team (As of )

Alexa Gagliardi, CFA

Alexa Gagliardi, CFA
Portfolio Manager

Alexa Gagliardi is the portfolio manager of the US Equity Index Strategies and a team leader in the Investment and Trading Solutions Group. She is the chairman of the Investment Advisory Committees of the US Equity Index Strategies and a member of the Investment Advisory Committee of the International Equity Index Strategy. Alexa also is a vice president of T. Rowe Price Associates, Inc.

  • Fund manager
    since 2019
  • Years at
    T. Rowe Price 7
  • Years investment
    experience 11

How to Invest

View platform information
Share ClassMin Initial Investment (USD)Min Subsequent Investment (USD)12b-1 FeeExpense Ratio
GrossNetLimitation TypeLimitation Expiration Date
Investor Class
Cusip 779552108
$2,500$1000.00% 0.18% 0.18% N/A N/A
I Class
Cusip 779552405
$1,000,000*N/A0.00% 0.06% 0.05% Contractual
04/30/2022

Benefits & Risks

  • Offers a convenient and relatively low-cost way to approximate the performance of a particular market.
  • Expenses are lower than the average actively managed fund, and lower expenses can increase total return.
  • Lower turnover should mean smaller capital gain distributions, which can raise after-tax returns.
  • Stocks can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling.
  • Actively managed funds may outperform this fund.

Investor Profile

  • For investors seeking capital appreciation over time who can accept the risk of loss inherent in common stock investing.
  • Appropriate for both regular and tax-deferred accounts, such as IRAs.

Risk/Return Characteristics

Data as of 09/30/2021

Risk/Return (5 Years)FundS&P 500 Index
Alpha-0.20%0.00%
Beta1.001.00
R-Squared1.001.00
Annualized Std. Deviation15.07%15.07%
Information Ratio-8.760.00
Sharpe Ratio1.021.04
Tracking Error0.03%0.00%

Asset Allocation (09/30/2021)

Category% of Total Net AssetsMarket Value (USD)
Global ex-US Stock0.19%$61,711,958.17
Reserves0.38%$123,423,916.33
US Bonds0.03%$9,743,993.39
US Stock99.40%$32,285,098,114.86

Holdings (06/30/2021)

Security Name% of FundPrev Qtr ChangeValueSectorIndustryCountry
5.89%0.18%$1,953,990,241.28Information TechnologyTechnology Hardware, Storage & PeripheralsUnited States
5.60%0.32%$1,855,646,037.00Information TechnologySoftwareUnited States
4.04%0.12%$1,341,218,619.36Consumer DiscretionaryInternet & Direct Marketing RetailUnited States
2.29%0.18%$757,779,354.53Communication ServicesInteractive Media & ServicesUnited States
2.01%0.17%$667,910,144.07Communication ServicesInteractive Media & ServicesUnited States
1.96%0.19%$649,144,398.96Communication ServicesInteractive Media & ServicesUnited States
1.44%0.00%$479,099,062.08FinancialsDiversified Financial ServicesUnited States
1.44%-0.08%$476,450,668.40Consumer DiscretionaryAutomobilesUnited States
1.37%0.39%$453,613,494.60Information TechnologySemiconductors & Semiconductor EquipmentUnited States
1.29%-0.09%$428,232,572.46FinancialsBanksUnited States
1.19%-0.09%$394,550,982.08Health CarePharmaceuticalsUnited States
1.09%0.02%$359,824,662.72Information TechnologyIT ServicesUnited States
1.04%-0.01%$343,690,844.52Health CareHealth Care Providers & ServicesUnited States
0.94%0.10%$311,482,232.04Information TechnologyIT ServicesUnited States
0.93%-0.04%$308,372,370.02Consumer DiscretionarySpecialty RetailUnited States
0.91%-0.08%$300,475,347.14Consumer StaplesHousehold ProductsUnited States
0.88%-0.12%$290,585,249.01Communication ServicesEntertainmentUnited States
0.88%-0.05%$290,432,015.72Information TechnologyIT ServicesUnited States
0.85%-0.02%$282,790,385.50FinancialsBanksUnited States
0.77%0.09%$254,720,018.52Information TechnologySoftwareUnited States
0.73%0.03%$243,012,609.08EnergyOil, Gas & Consumable FuelsUnited States
0.72%-0.02%$238,025,143.30Communication ServicesMediaUnited States
0.64%-0.04%$213,140,658.15Communication ServicesEntertainmentUnited States
0.64%-0.08%$210,921,405.11Communication ServicesDiversified Telecommunication ServicesUnited States
0.62%-0.15%$206,223,890.04Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.62%0.04%$205,780,131.83Information TechnologySoftwareUnited States
0.61%-0.03%$203,169,405.00Information TechnologyCommunications EquipmentUnited States
0.60%0.00%$199,353,848.32Health CarePharmaceuticalsUnited States
0.58%-0.03%$190,990,227.26Consumer StaplesBeveragesUnited States
0.57%-0.06%$187,404,902.55Health CareHealth Care Equipment & SuppliesUnited States
0.56%-0.08%$186,895,075.16Communication ServicesDiversified Telecommunication ServicesUnited States
0.56%-0.02%$186,172,937.94Consumer StaplesBeveragesUnited States
0.56%-0.04%$184,155,543.84EnergyOil, Gas & Consumable FuelsUnited States
0.55%-0.02%$180,909,076.48Health CareBiotechnologyUnited States
0.54%0.01%$180,397,967.53Health CareLife Sciences Tools & ServicesUnited States
0.54%-0.04%$179,091,944.57Health CarePharmaceuticalsUnited States
0.54%0.04%$178,955,963.34Consumer DiscretionaryTextiles, Apparel & Luxury GoodsUnited States
0.53%-0.02%$177,078,348.72Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.53%-0.03%$176,006,356.90Consumer StaplesFood & Staples RetailingUnited States
0.51%-0.01%$170,414,561.52Information TechnologyIT ServicesUnited States
0.51%0.03%$170,236,052.00FinancialsBanksUnited States
0.50%0.06%$166,233,761.84Health CarePharmaceuticalsUnited States
0.49%-0.03%$161,496,809.10Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.48%0.02%$159,083,080.20Consumer StaplesFood & Staples RetailingUnited States
0.47%-0.02%$156,596,205.65Consumer DiscretionaryHotels Restaurants & LeisureUnited States
0.47%0.04%$155,024,594.64Health CareHealth Care Equipment & SuppliesUnited States
0.46%-0.01%$151,876,406.51Health CareHealth Care Equipment & SuppliesUnited States
0.44%-0.00%$146,719,360.16Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.42%0.01%$140,523,410.83Consumer StaplesTobaccoUnited States
0.42%-0.03%$138,557,472.55Industrials & Business ServicesIndustrial ConglomeratesUnited States
0.41%-0.02%$136,696,887.60MaterialsChemicalsUnited States
0.41%0.05%$136,640,449.40Industrials & Business ServicesAir Freight & LogisticsUnited States
0.41%-0.01%$135,725,251.74Health CarePharmaceuticalsUnited States
0.40%-0.05%$132,900,832.75FinancialsBanksUnited States
0.40%-0.04%$132,739,191.36Industrials & Business ServicesRoad & RailUnited States
0.39%-0.05%$130,757,168.00UtilitiesElectric UtilitiesUnited States
0.39%0.00%$128,711,553.60Information TechnologySoftwareUnited States
0.38%-0.04%$127,356,937.50Health CareBiotechnologyUnited States
0.38%-0.04%$124,727,753.22Consumer DiscretionarySpecialty RetailUnited States
0.37%0.03%$124,092,879.24FinancialsCapital MarketsUnited States
0.37%0.06%$121,840,086.39Information TechnologySoftwareUnited States
0.36%-0.05%$119,773,052.76Industrials & Business ServicesAerospace & DefenseUnited States
0.36%-0.02%$119,752,646.97Consumer DiscretionaryHotels Restaurants & LeisureUnited States
0.36%-0.00%$119,220,840.00Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.36%0.01%$119,096,898.91Information TechnologyIT ServicesUnited States
0.35%0.01%$117,413,859.20Industrials & Business ServicesAerospace & DefenseUnited States
0.35%0.02%$117,384,454.17FinancialsCapital MarketsUnited States
0.34%0.02%$112,781,008.09FinancialsCapital MarketsUnited States
0.34%0.02%$111,549,450.48Real EstateEquity Real Estate Investment Trusts (REITs)United States
0.33%0.03%$108,682,194.42Consumer DiscretionaryMultiline RetailUnited States
0.33%-0.05%$108,640,460.74Industrials & Business ServicesMachineryUnited States
0.32%N/A$107,533,635.96Industrials & Business ServicesIndustrial ConglomeratesUnited States
0.32%-0.01%$104,622,989.49Industrials & Business ServicesIndustrial ConglomeratesUnited States
0.31%0.03%$103,775,836.53Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.30%-0.05%$100,138,601.52Industrials & Business ServicesMachineryUnited States
0.30%0.01%$100,032,711.52Health CareHealth Care Providers & ServicesUnited States
0.30%0.01%$99,285,681.87FinancialsCapital MarketsUnited States
0.30%0.04%$99,077,415.40Health CareHealth Care Equipment & SuppliesUnited States
0.30%0.01%$98,502,441.10Information TechnologySoftwareUnited States
0.30%0.02%$97,849,206.00FinancialsConsumer FinanceUnited States
0.27%0.01%$90,555,682.55Communication ServicesMediaUnited States
0.27%0.02%$89,988,289.35FinancialsCapital MarketsUnited States
0.26%-0.03%$86,673,311.48Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.26%-0.00%$84,979,516.80Health CareHealth Care Providers & ServicesUnited States
0.26%0.00%$84,694,461.30Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.25%-0.02%$84,058,776.20Industrials & Business ServicesAerospace & DefenseUnited States
0.25%-0.04%$81,631,073.63Consumer DiscretionaryHotels Restaurants & LeisureUnited States
0.24%0.02%$80,477,329.68Health CarePharmaceuticalsUnited States
0.24%0.01%$80,477,277.93Real EstateEquity Real Estate Investment Trusts (REITs)United States
0.24%-0.04%$80,210,824.32Consumer StaplesTobaccoUnited States
0.24%-0.02%$79,847,337.05Information TechnologyIT ServicesUnited States
0.24%-0.00%$79,746,307.48Consumer StaplesFood ProductsUnited States
0.24%-0.00%$78,518,165.88Health CareBiotechnologyUnited States
0.23%-0.00%$77,339,802.10Health CareHealth Care Equipment & SuppliesUnited States
0.23%0.02%$77,331,688.84Communication ServicesWireless Telecommunication ServicesUnited States
0.23%-0.01%$76,883,617.18Information TechnologyIT ServicesUnited States
0.23%0.01%$76,695,956.10Real EstateEquity Real Estate Investment Trusts (REITs)United States
0.23%0.01%$74,888,121.00EnergyOil, Gas & Consumable FuelsUnited States
0.22%-0.03%$73,936,206.25Health CareHealth Care Providers & ServicesUnited States
0.22%0.00%$73,640,608.88FinancialsBanksUnited States
0.22%-0.01%$73,631,134.92Consumer DiscretionarySpecialty RetailUnited States
0.21%-0.01%$70,220,652.30FinancialsBanksUnited States
0.21%-0.01%$69,489,574.44FinancialsCapital MarketsUnited States
0.21%-0.01%$69,064,709.44UtilitiesElectric UtilitiesUnited States
0.21%-0.01%$68,256,026.86Consumer DiscretionaryAutomobilesUnited States
0.20%-0.03%$67,778,098.50FinancialsBanksUnited States
0.20%-0.01%$67,584,690.72Communication ServicesEntertainmentUnited States
0.20%0.01%$66,876,001.92Consumer StaplesPersonal ProductsUnited States
0.20%-0.00%$66,262,374.63Industrials & Business ServicesAir Freight & LogisticsUnited States
0.20%-0.02%$66,157,653.68Industrials & Business ServicesRoad & RailUnited States
0.20%0.02%$65,439,991.00Real EstateEquity Real Estate Investment Trusts (REITs)United States
0.20%0.01%$65,098,966.60FinancialsInsuranceUnited States
0.20%-0.02%$65,029,983.12FinancialsInsuranceUnited States
0.19%-0.01%$64,349,046.76Health CareHealth Care Equipment & SuppliesUnited States
0.19%0.02%$63,530,409.55FinancialsConsumer FinanceUnited States
0.19%0.02%$62,754,744.15Health CareLife Sciences Tools & ServicesUnited States
0.19%-0.01%$62,646,658.80Consumer StaplesHousehold ProductsUnited States
0.18%-0.00%$60,609,881.80FinancialsCapital MarketsUnited States
0.18%-0.02%$60,325,569.72Industrials & Business ServicesRoad & RailUnited States
0.18%0.00%$59,287,299.60MaterialsChemicalsUnited States
0.18%0.02%$58,586,441.90Health CareHealth Care Equipment & SuppliesUnited States
0.18%-0.00%$58,318,117.20Information TechnologySoftwareUnited States
0.18%-0.01%$58,251,240.72Industrials & Business ServicesMachineryUnited States
0.18%-0.02%$58,106,724.33UtilitiesElectric UtilitiesUnited States
0.17%-0.03%$57,853,784.94Information TechnologyIT ServicesUnited States
0.17%-0.01%$57,835,762.56MaterialsChemicalsUnited States
0.17%0.00%$57,787,225.60Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.17%0.00%$55,128,971.40Health CareHealth Care Equipment & SuppliesUnited States
0.16%-0.02%$53,911,213.16UtilitiesMulti-UtilitiesUnited States
0.16%-0.00%$53,583,517.98Industrials & Business ServicesElectrical EquipmentUnited States
0.16%0.01%$53,224,952.22Health CareBiotechnologyUnited States
0.16%0.02%$53,143,654.54Consumer DiscretionaryAutomobilesUnited States
0.16%0.02%$53,068,361.76FinancialsCapital MarketsUnited States
0.16%-0.00%$52,439,732.40Industrials & Business ServicesElectrical EquipmentUnited States
0.16%-0.01%$52,239,961.41FinancialsInsuranceUnited States
0.16%-0.00%$51,827,902.24Health CareHealth Care Providers & ServicesUnited States
0.16%-0.01%$51,703,607.60Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.15%-0.02%$50,279,286.46Information TechnologyIT ServicesUnited States
0.15%0.00%$49,913,673.04Communication ServicesInteractive Media & ServicesUnited States
0.15%0.00%$49,457,734.98Industrials & Business ServicesAerospace & DefenseUnited States
0.15%0.01%$49,450,819.17MaterialsMetals & MiningUnited States
0.15%0.00%$49,415,201.54Health CareHealth Care Providers & ServicesUnited States
0.15%0.00%$49,404,887.65Industrials & Business ServicesCommercial Services & SuppliesUnited States
0.15%0.02%$49,111,854.20Health CareHealth Care Equipment & SuppliesUnited States
0.15%-0.01%$48,978,510.12FinancialsInsuranceUnited States
0.14%-0.02%$47,544,958.89Health CareBiotechnologyUnited States
0.14%0.02%$47,451,109.45Health CareBiotechnologyUnited States
0.14%-0.01%$46,452,224.91Consumer DiscretionaryMultiline RetailUnited States
0.14%-0.02%$46,304,527.64MaterialsChemicalsUnited States
0.14%-0.00%$46,077,703.66MaterialsMetals & MiningUnited States
0.14%-0.01%$45,355,033.74Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.14%0.01%$44,887,172.80Industrials & Business ServicesIndustrial ConglomeratesUnited States
0.14%0.01%$44,792,055.80Industrials & Business ServicesBuilding ProductsUnited States
0.13%0.01%$44,222,699.36EnergyOil, Gas & Consumable FuelsUnited States
0.13%-0.01%$43,057,610.40MaterialsChemicalsUnited States
0.13%0.02%$42,214,324.88Health CareLife Sciences Tools & ServicesUnited States
0.13%0.01%$41,794,105.86Real EstateEquity Real Estate Investment Trusts (REITs)United States
0.13%0.01%$41,456,407.23Consumer DiscretionaryInternet & Direct Marketing RetailUnited States
0.12%-0.02%$40,986,446.16Consumer StaplesHousehold ProductsUnited States
0.12%0.01%$40,887,685.41EnergyEnergy Equipment & ServicesUnited States
0.12%0.01%$40,825,713.24Health CareLife Sciences Tools & ServicesUnited States
0.12%0.01%$40,821,414.00FinancialsCapital MarketsUnited States
0.12%-0.00%$40,615,596.69Information TechnologyElectronic Equip, Instr & CmptsSwitzerland
0.12%-0.01%$40,541,671.80FinancialsInsuranceUnited States
0.12%-0.01%$40,337,696.00Consumer DiscretionarySpecialty RetailUnited States
0.12%-0.00%$40,206,493.80Industrials & Business ServicesAerospace & DefenseUnited States
0.12%0.01%$40,147,588.00Health CareHealth Care Equipment & SuppliesUnited States
0.12%0.02%$39,975,136.12FinancialsCapital MarketsUnited States
0.12%0.00%$39,937,756.32Industrials & Business ServicesBuilding ProductsUnited States
0.12%0.00%$39,761,569.98Consumer DiscretionaryHotels Restaurants & LeisureUnited States
0.12%-0.01%$39,312,629.58UtilitiesElectric UtilitiesUnited States
0.12%-0.01%$39,088,800.32Industrials & Business ServicesAerospace & DefenseUnited States
0.12%0.01%$38,947,366.64Real EstateEquity Real Estate Investment Trusts (REITs)United States
0.12%0.01%$38,915,890.16Consumer DiscretionaryAuto ComponentsUnited States
0.12%0.01%$38,826,327.54Health CareHealth Care Providers & ServicesUnited States
0.12%0.01%$38,540,422.70Industrials & Business ServicesProfessional ServicesUnited States
0.12%-0.01%$38,520,086.66UtilitiesElectric UtilitiesUnited States
0.12%0.00%$38,384,176.41Information TechnologySoftwareUnited States
0.12%-0.00%$38,368,202.76Real EstateEquity Real Estate Investment Trusts (REITs)United States
0.11%-0.00%$38,112,773.76UtilitiesMulti-UtilitiesUnited States
0.11%0.00%$37,757,432.14FinancialsCapital MarketsUnited States
0.11%0.01%$37,485,476.00Health CareHealth Care Equipment & SuppliesUnited States
0.11%-0.00%$37,458,366.05Communication ServicesEntertainmentUnited States
0.11%-0.01%$37,407,143.94MaterialsChemicalsUnited States
0.11%-0.01%$37,161,462.80FinancialsInsuranceUnited States
0.11%-0.01%$36,995,662.84Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.11%-0.01%$36,992,639.09Information TechnologyElectronic Equip, Instr & CmptsUnited States
0.11%0.01%$36,866,555.38Health CareBiotechnologyUnited States
0.11%-0.02%$36,820,700.00Health CareHealth Care Equipment & SuppliesUnited States
0.11%0.00%$36,606,690.21FinancialsInsuranceUnited States
0.11%0.00%$36,466,596.00MaterialsChemicalsUnited States
0.11%-0.01%$36,235,698.50Consumer StaplesFood & Staples RetailingUnited States
0.11%0.01%$35,999,380.80Industrials & Business ServicesBuilding ProductsUnited States
0.11%0.00%$35,962,828.15Consumer DiscretionarySpecialty RetailUnited States
0.11%-0.01%$35,959,509.90Industrials & Business ServicesMachineryUnited States
0.11%-0.01%$35,930,415.69Consumer StaplesBeveragesUnited States
0.11%0.00%$35,558,465.76FinancialsInsuranceUnited States
0.11%0.00%$34,989,826.20EnergyOil, Gas & Consumable FuelsUnited States
0.10%-0.01%$34,622,574.64Information TechnologySoftwareUnited States
0.10%0.00%$34,581,020.40MaterialsChemicalsUnited States
0.10%-0.01%$34,518,473.20Consumer StaplesFood & Staples RetailingUnited States
0.10%-0.00%$34,361,641.44EnergyOil, Gas & Consumable FuelsUnited States
0.10%-0.01%$34,153,641.72FinancialsInsuranceUnited States
0.10%0.01%$34,143,826.80EnergyOil, Gas & Consumable FuelsUnited States
0.10%-0.01%$33,805,791.90Consumer StaplesFood ProductsUnited States
0.10%0.01%$33,461,906.65Information TechnologyCommunications EquipmentUnited States
0.10%-0.02%$33,220,503.76Consumer DiscretionaryHotels Restaurants & LeisureUnited States
0.10%-0.02%$33,213,355.96Information TechnologyIT ServicesUnited States
0.10%-0.02%$32,817,707.41Information TechnologyTechnology Hardware, Storage & PeripheralsUnited States
0.10%0.01%$32,784,073.50FinancialsConsumer FinanceUnited States
0.10%0.01%$32,747,470.28Health CareHealth Care Equipment & SuppliesUnited States
0.10%0.01%$32,453,166.08Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.10%-0.02%$32,374,554.66Industrials & Business ServicesMachineryUnited States
0.10%0.00%$32,300,418.29Industrials & Business ServicesAerospace & DefenseUnited States
0.10%0.00%$32,259,862.69EnergyOil, Gas & Consumable FuelsUnited States
0.10%-0.01%$32,189,099.76UtilitiesElectric UtilitiesUnited States
0.10%0.01%$31,819,008.00Real EstateEquity Real Estate Investment Trusts (REITs)United States
0.09%0.01%$31,452,519.00Real EstateEquity Real Estate Investment Trusts (REITs)United States
0.09%0.00%$31,140,606.00Information TechnologyIT ServicesUnited States
0.09%-0.00%$31,083,981.75Consumer DiscretionaryHotels Restaurants & LeisureUnited States
0.09%-0.00%$30,957,634.52FinancialsInsuranceUnited States
0.09%-0.00%$30,909,454.20Consumer StaplesFood ProductsUnited States
0.09%-0.01%$30,636,232.20Consumer StaplesBeveragesUnited States
0.09%-0.01%$30,587,642.36Health CareHealth Care Equipment & SuppliesUnited States
0.09%-0.01%$30,573,310.16Consumer DiscretionaryHotels Restaurants & LeisureUnited States
0.09%0.00%$30,475,960.00Industrials & Business ServicesCommercial Services & SuppliesUnited States
0.09%-0.00%$30,174,732.99Industrials & Business ServicesMachineryUnited States
0.09%-0.00%$30,103,318.98Industrials & Business ServicesElectrical EquipmentUnited States
0.09%0.01%$30,020,383.64Industrials & Business ServicesMachineryUnited States
0.09%0.00%$29,734,013.37FinancialsBanksUnited States
0.09%-0.01%$29,687,402.15MaterialsChemicalsUnited States
0.09%0.01%$29,406,612.18Health CareLife Sciences Tools & ServicesUnited States
0.09%0.01%$29,306,897.60Information TechnologySoftwareUnited States
0.09%0.00%$29,192,680.80EnergyOil, Gas & Consumable FuelsUnited States
0.09%0.00%$29,180,526.08EnergyOil, Gas & Consumable FuelsUnited States
0.09%-0.00%$29,171,408.78Consumer DiscretionarySpecialty RetailUnited States
0.09%-0.01%$28,864,888.70Information TechnologyElectronic Equip, Instr & CmptsUnited States
0.09%-0.00%$28,701,523.50Information TechnologySemiconductors & Semiconductor EquipmentUnited States
0.09%-0.02%$28,642,904.44Industrials & Business ServicesAirlines
Sours: https://www.troweprice.com/financial-intermediary/us/en/investments/mutual-funds/us-products/equity-index-500-fund.html
Should You Buy Index Funds at All-Time Highs? - Jack Bogle Explains

Risk Analysis

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Historical Performance (%)

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Calendar Performance (%)

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Key Reasons To Own

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Portfolio Analysis

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Portfolio Managers

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Important Mutual Fund Information

*TD Asset Management Inc. (TDAM) has closed the fund or series of the fund, denoted by an asterisk (*), to all purchases. Unitholders that currently hold units of the fund or series of the fund may continue to do so but cannot purchase any additional units. For more information, please refer to the applicable Fund Facts document.

Effective on or about November 1, 2019, the Deferred Sales Charge (Back-load) (DSC), low-load (LSC) and low-load-2 (LSC2) purchase options of Advisor Series, T5 Series and T8 Series securities of TD Mutual Funds and TD Managed Assets Program portfolios will be closed to all purchases by investors, including purchases made through Pre-Authorized Contribution Plans. Existing unitholders may still hold or redeem their securities of the Capped Funds and/or back-end load options of impacted funds. Existing unitholders may also switch into a different fund of the same deferred sales charge option.

Effective July 29, 2020, the TD International Growth Class was renamed to TD International Stock Class. Effective July 29, 2020, TD U.S. Equity Portfolio was renamed to TD U.S. Equity Pool.

TD Mutual Funds are qualified for sale in the provinces and territories of Canada. This site does not constitute an offer or solicitation to residents of the US or the UK or anyone in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such a solicitation.

The portfolio manager of record for the classes of TD Mutual Funds Corporate Class Ltd. is Dino Vevaina. Each class invests in one or more underlying mutual funds, as noted in the TD Mutual Funds Simplified Prospectus. For more information about the portfolio manager(s) of the underlying fund(s), please see the webpage or annual information form of the underlying fund(s).

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund facts and prospectus, which contains detailed investment information, before investing. The indicated rates of return (other than for each money market fund) are the historical annual compounded total returns for the period indicated including changes in unit value and reinvestment of distributions. The indicated rates of return for each money market fund is an annualized historical yield based on the seven-day period ended as indicated and annualized in the case of effective yield by compounding the seven day return and does not represent an actual one year return. The indicated rates of return do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unit holder that would have reduced returns. Mutual funds are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer and are not guaranteed or insured. Their values change frequently. There can be no assurances that a money market fund will be able to maintain its net asset value per unit at a constant amount or that the full amount of your investment will be returned to you. Past performance may not be repeated.

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Important Mutual Fund Information

*TD Asset Management Inc. (TDAM) has closed the fund or series of the fund, denoted by an asterisk (*), to all purchases. Unitholders that currently hold units of the fund or series of the fund may continue to do so but cannot purchase any additional units. For more information, please refer to the applicable Fund Facts document.

Effective on or about November 1, 2019, the Deferred Sales Charge (Back-load) (DSC), low-load (LSC) and low-load-2 (LSC2) purchase options of Advisor Series, T5 Series and T8 Series securities of TD Mutual Funds and TD Managed Assets Program portfolios will be closed to all purchases by investors, including purchases made through Pre-Authorized Contribution Plans. Existing unitholders may still hold or redeem their securities of the Capped Funds and/or back-end load options of impacted funds. Existing unitholders may also switch into a different fund of the same deferred sales charge option.

Effective July 29, 2020, the TD International Growth Class was renamed to TD International Stock Class. Effective July 29, 2020, TD U.S. Equity Portfolio was renamed to TD U.S. Equity Pool.

TD Mutual Funds are qualified for sale in the provinces and territories of Canada. This site does not constitute an offer or solicitation to residents of the US or the UK or anyone in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such a solicitation.

The portfolio manager of record for the classes of TD Mutual Funds Corporate Class Ltd. is Dino Vevaina. Each class invests in one or more underlying mutual funds, as noted in the TD Mutual Funds Simplified Prospectus. For more information about the portfolio manager(s) of the underlying fund(s), please see the webpage or annual information form of the underlying fund(s).

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund facts and prospectus, which contains detailed investment information, before investing. The indicated rates of return (other than for each money market fund) are the historical annual compounded total returns for the period indicated including changes in unit value and reinvestment of distributions. The indicated rates of return for each money market fund is an annualized historical yield based on the seven-day period ended as indicated and annualized in the case of effective yield by compounding the seven day return and does not represent an actual one year return. The indicated rates of return do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unit holder that would have reduced returns. Mutual funds are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer and are not guaranteed or insured. Their values change frequently. There can be no assurances that a money market fund will be able to maintain its net asset value per unit at a constant amount or that the full amount of your investment will be returned to you. Past performance may not be repeated.

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Sours: https://www.td.com/ca/en/asset-management/funds/solutions/mutual-funds/fundCard/TD%20U.S.%20Index%20Fund%20(US$)%20-%20e?fundId=3271

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