DEFINITION of 'Indexing'

1. The adjustment of the weights of assets in an investment portfolio so that its performance matches that of an index.

2. Linking movements of rates to the performance of an index.


1. Indexing is a passive investment strategy. An investor can achieve the same risk and return of an index by investing in an index fund.

2. Examples of rates that could be linked to the performance of an index are wages or tax rates.

  1. Index Hugger

    A managed mutual fund that tends to perform much like a benchmark ...
  2. Index Fund

    An index fund is a type of mutual fund with a portfolio constructed ...
  3. Asset

    1. A resource with economic value that an individual, corporation ...
  4. Index

    A statistical measure of change in an economy or a securities ...
  5. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
  6. 130-30 Strategy

    A strategy that uses financial leverage by shorting poor performing ...
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  1. Can mutual funds only hold stocks?

    There are some types of mutual funds, called stock funds or equity funds, which hold only stocks. However, there are a number ... Read Full Answer >>
  2. How do mutual funds compound interest?

    The magic of compound interest can be summed up as the concept of interest making interest. On the other hand, simple interest ... Read Full Answer >>
  3. Do mutual funds pay interest?

    Some mutual funds pay interest, though it depends on the types of assets held in the funds' portfolios. Specifically, bond ... Read Full Answer >>
  4. Why have mutual funds become so popular?

    Mutual funds have become an incredibly popular option for a wide variety of investors. This is primarily due to the automatic ... Read Full Answer >>
  5. Do mutual funds pay dividends?

    Depending on the specific assets in its portfolio, a mutual fund may generate income for shareholders in the form of capital ... Read Full Answer >>
  6. Can mutual funds invest in hedge funds?

    Mutual funds are legally allowed to invest in hedge funds. However, hedge funds and mutual funds have striking differences ... Read Full Answer >>

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