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Index fund investing can be a great way to gain exposure to a sector, country or benchmark index. Provided the costs of investing in the index are low, the returns should closely match the performance of the underlying index. In some cases, if regular investment plans are followed, entrance costs of investing in equity index funds are waived. Index funds are great for buy and hold investors who want to be actively involved in the market but inactive in stock selection and managing a portfolio. Index fund investing is comprised of the constituent stocks of
the index closely matched in percentage terms to the weighting of
the index. In the US, index funds aim to match the performance of
the SP 500 and the NASDAQ 100. Examples of funds that track the
S&P 500 include the Dreyfus Basic S&P 500 Index and the
Fidelity Spartan 500 Index. With a high majority of funds struggling
to match or outperform the market, index fund investing can be a
relatively safe way to invest during bull markets. The costs of fund participation is an area that investors often
fail to scrutinize. During a bull market where the fund returns
a 20-25% annual performance, the fees are not so noticeable as a
percentage of total returns. If, however, the market return halves,
because fees are charged on a percentage basis, the cost of participation
can potentially double. That's where index fund investing can contribute
a valid case. With some index funds offering reduced fees and fee
waiving for regular contributions, this can become a significant
amount when added up over the duration of the investment hold. International stock index funds are also a way for investors to
gain exposure to foreign markets. The Vanguard Pacific Stock Index
and Vanguard European stock Index are two examples. With the emerging
markets such as China, India and Brazil, using index funds to invest
is a great way to gain foreign exposure. The Xinhua/FTSE China B
All-Share Index tracks all 107 B class share listed in Shanghai.
The iShares Inc MSCI Brazil Free Index Fund (EWZ) seeks to provide
returns that replicate the performance of publicly traded securities
in the Brazilian market as determined by the MSCI Brazil index.
Next Article: Emerging markets funds 
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