An index fund does not pick shares but copies the make-up of a stock market index, such as the S&P 500, at minimal cost.
An index fund buys the same securities in the same proportions as a particular stock market index. The manager does not try to beat the market, so the fund needs no analysts or frequent trading, and its annual costs are usually several times lower than those of active funds.
An index fund's result almost equals the index's result minus a small fee. According to the SPIVA report as of the end of 2024, 91.99% of active US large-cap funds trailed the S&P 500 over 20 years.
An index fund removes the risk of a single company but not the risk of the whole market falling, so it suits money invested for many years.
In detail, with examples: What ETFs and index funds are: how a Ukrainian can invest in the S&P 500
ETF (exchange-traded fund) Diversification Compound interest
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How exchange-traded and index funds work, what fees cost over 20 years, how to buy an S&P 500 fund from Ukraine within the NBU limit, dividends or reinvestment, and taxes.