Index-linked investments are growing fast in popularity globally, and are increasing in size and complexity too. Today as many as 40% of US assets under management are index-linked.
An index is essentially an abstract, mathematical construct, created by index providers and stock exchanges to measure the performance of the market.
Index-linked funds closely track the investments within an index thereby mirroring its performance. They are popular with long-term investors who are happy with investment performance in line with the index and those who enjoy the significantly lower fees involved. They’re also not exposed to the risks associated with actively managed funds, which is attractive to cautious investors.