What is the primary goal of an index fund?

The primary goal of an index fund is to replicate the performance of a specific index. An index fund is designed to track the performance of a particular market index, such as the S&P 500 or the Dow Jones Industrial Average. By doing this, the fund aims to provide investors with returns that are in line with the overall performance of the market, as represented by the index.

This approach is typically more cost-effective than actively managed funds, as index funds usually have lower fees and expenses due to a passive management strategy. They do not try to outperform the market or select individual stocks; instead, they aim for broad market exposure by mimicking the holdings of the index. This strategy is based on the belief that, over time, passive management can lead to returns that are comparable to or even better than those of actively managed funds after accounting for fees.

Choosing to invest specifically in technology stocks, seeking to outperform other mutual funds, or aiming for high-risk returns doesn't align with the fundamental purpose of index funds, which focuses on overall market performance rather than targeting specific sectors or taking on higher risk for potentially higher returns.