On: The ETF Files: How the U.S. government inadvertent...

[anonymousDan]

Can you clarify the difference between an index fund and an etf? I always thought they were synonymous.

[karmapolice → anonymousDan]

ETFs are just investment funds you can buy and sell in the stock market, with their own symbol and everything just like any other stocks.

Index (passive) funds track an index, instead of trying to outperform the market.

You can have passive funds that are not ETFs (do not appear as a symbol in the stock market, have to go through a bank or whatever to buy shares), and active funds that are ETFs (actively managed).

[lmm → karmapolice]

Presumably any ETF is tracking something, that you could define to be an "index" in a degenerate sense (even if it's the "companies Buffet thinks are undervalued index", or the "solid gold bars index"). Or is there a technical definition of index?

[dne → anonymousDan]

ETF = investment fund traded on a stock exchange.

Index fund = investment fund (mutual fund or ETF) that tracks an index, i.e. passively managed.

[MagicWishMonkey → dne]

So is something like VSGAX an ETF or is it an index fund?

[elbows → MagicWishMonkey]

If I understand correctly, ETF and index fund are orthogonal terms. An ETF is traded on the stock market -- in contrast to a mutual fund which you have to buy through other channels.

An index fund tracks an index rather than being actively managed.

I don't know about VSGAX specifically, but it could be both an ETF and an index fund.

[dne → MagicWishMonkey]

It's an index mutual fund[1] that is also available as an ETF[2].

1: https://personal.vanguard.com/us/funds/snapshot?FundId=5861&...

2: https://personal.vanguard.com/us/funds/snapshot?FundId=0938&...

[tonfa → MagicWishMonkey]

Index fund, it isn't trading in an exchange.