What is an index, and why do so many ETFs just track one?
An index is just a published list — like ‘the 500 biggest US companies’. Many ETFs simply copy that list.
👉 Change the numbers above — it’s your money, your assumptions.
What an index actually is
An index is simply a published list, put together by rules rather than opinion — for example, ‘the 500 largest US companies, weighted by size’. Nobody is judging which names look exciting; a company is in the list because it meets the rule, and out when it stops. That list gets a name and a number you can follow in the news, like the S&P 500 or MSCI World.
Tracking, not guessing
An index ETF just follows that recipe — it copies the list instead of trying to out-guess it. The way it copies is called its Wie der Fonds seinen Index nachbildet: durch direkten Kauf der Aktien (physische Replikation) oder durch einen Swap-Vertrag (synthetische Replikation). More → : it can hold the actual shares in the same proportions, or use other methods to mirror the result. The example fund above is a real ETF doing exactly this behind the scenes.
Why ‘boring’ is so popular
Copying a list is cheap to run, so the yearly fee — the Die jährlichen laufenden Kosten des Fonds, dargestellt als % deines Geldes. €0,20 pro €100 pro Jahr bei 0,20%. Niedriger ist günstiger. More → — is low. It is transparent: you can see exactly what you own. And it does not depend on one star manager staying right year after year. Over long periods, most professional stock-pickers have historically struggled to beat a cheap, broad index after their own fees, which is a big part of why index investing caught on. None of this guarantees a profit, and markets still go down as well as up.
Famous examples you will keep seeing
A few names you will meet constantly: the S&P 500 (500 large US companies), MSCI World (thousands of companies across developed countries), and FTSE All-World (developed and emerging markets). Many different ETFs, from different providers, track the very same index — so they hold almost identical things and mostly differ on fee and structure, not on what is inside.