What is the difference between a bond index fund and an equity index fund?

What is the difference between a bond index fund and an equity index fund Introduction: The World of Index Funds Hello everyone! Welcome to our video on bond index funds and equity index funds. Before we dive into the differences, let's establish a common understanding of what index funds are. Index funds are a type of mutual fund or exchange-traded fund (ETF) that aim to replicate the performance of a specific market index, such as the S&P 500 or the Bloomberg Barclays U.S. Aggregate Bond Index. Bond Index Funds: A Closer Look Bond index funds, as the name suggests, are funds that primarily invest in a diversified portfolio of bonds. Bonds, unlike stocks, represent debt obligations. When you invest in a bond, you essentially lend money to the issuer, be it a government or a corporation. Bond index funds typically hold a range of bonds, including government bonds, corporate bonds, and municipal bonds. The objective is to mirror the performance of the underlying bond index, capturing the overall movements in the bond market. Equity Index Funds: Unveiling the Stock Market