Index funds are mutual funds or exchange-traded funds (ETFs) that aim to replicate the performance of a specific stock market index, such as the S&P 500, Dow Jones Industrial Average, or NASDAQ Composite Index. Index funds passively invest in a diversified portfolio of securities that mirror the composition and weighting of the target index, seeking to match its returns and investment characteristics. Index funds offer investors broad market exposure, low fees, and simplicity compared to actively managed funds, which aim to outperform the market through stock selection and timing. By tracking a market index, index funds provide investors with diversification benefits, reduced portfolio turnover, and transparency, making them suitable for long-term investors seeking low-cost, low-maintenance investment options. Index funds are popular among individual investors, retirement accounts, and institutional investors seeking to build diversified portfolios, achieve market returns, and minimize investment costs and risks.