Using the 401(k) Fund Tracker to
Evaluate Index Funds
Q: I thought the S&P 500 Index was just a benchmark for the largest 500 stocks, but the SMI 401(k) Fund Tracker has a ticker (IVV) for the S&P 500 Index. Is the S&P 500 actually a fund?
You're not wrong—the S&P 500 is a tracking benchmark. However, there are numerous mutual funds that attempt to track the returns of that popular index. The ticker you mention, IVV, is a certain type of indexed mutual fund called an exchange traded fund (ETF). We include it, along with other low-cost index tracking ETFs, in our 401(k) Fund Tracker as benchmarks to help readers evaluate if the index funds they are considering are good choices. That may seem odd, but it helps to know that all index funds are not created equal. The returns from index funds will vary depending on the fees charged to shareholders. Thankfully, determining whether a particular index fund is a good one isn't difficult. Simply compare the posted return of the fund against the corresponding index fund included in the 401(k) Fund Tracker. If its returns are similar (over both short- and long-term periods), that's great. But if the fund trails the listed index fund by more than .25% per year, it's probably worth looking for an alternate fund which tracks the same index more closely. 
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