Which fund seeks to mirror a market index and match its performance?

• A. Index Fund
• B. Growth Fund
• C. Sector Fund
• D. Life Cycle Fund

Answer: (A)

Index funds are built to replicate a market index by holding the same stocks in roughly the same weights as that index. The goal is to deliver returns that closely match the index, after fees. This is a passive strategy: you’re aiming to match the market, not beat it, which is why these funds typically have lower costs and less turnover.

Growth funds, on the other hand, seek stocks with high growth potential and are actively managed to outperform the market, often with higher fees and more risk. Sector funds concentrate on a single industry, which can cause returns to swing with that sector rather than the whole market. Life cycle (target-date) funds adjust the asset mix over time as you near a target date, rather than aiming to mirror a specific index.

So the fund that seeks to mirror a market index and match its performance is the index fund.