Getting Started: Index Funds Are Hot -- but Which One? --- Popular S&P 500 Loses Some Luster
{An Occasional Look at Financial Fundamentals}</br></br>First, the good news: If you invest in a mutual fund that tracks the U.S. stock market as a whole, you are likely to outperform the vast majority of all stock mutual funds.</br></br>Now, the bad news: Although a lot of folks think they own funds that track the whole market's performance, they don't.</br></br>So-called index funds are the hottest mutual-fund product of 1990, with industry giants Dreyfus Corp., Fidelity Investments and Vanguard Group slugging it out for market share.</br></br>Unlike most stock funds, which are actively managed in an effort to achieve superior returns, index funds don't try to outguess market swings or hunt for bargains. They simply buy and hold all or most of the stocks that make up a market index. Dreyfus, Fidelity and Vanguard all now offer funds that seek to track the performance of Standard & Poor's 500-stock index, the most popular benchmark among index fund investors.