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.
Tracking, not guessing
An index is a transparent set of rules — for example, ‘hold the 500 largest US companies, weighted by size’. An index ETF just follows that recipe. The way it copies the list is called its How the fund copies its index: by buying the shares directly (physical) or using a swap contract (synthetic). More → : it can buy the actual shares, or use other methods to mirror the result.
Why ‘boring’ is so popular
Copying a list is cheap, so the The yearly running cost of the fund, shown as a % of your money. €0.20 per €100 a year at 0.20%. Lower is cheaper. More → is low. It is transparent — you can see exactly what you own. And it does not depend on a star manager being right. None of this guarantees a profit, and markets still go down as well as up. But for broad, long-term exposure, low-cost index ETFs are why ‘boring’ has become so popular.