About.com and the official NASDAQ website list several index funds that are available for investment. An investor can purchase shares of these funds through a brokerage account. Funds with profitable companies that have low expenses are attractive to investors.
An index is a statistical compilation of securities that represent a particular market segment or industry, notes About.com. Index funds make it easier for investors to target a specific niche without having to conduct research on multiple companies. For instance, the S&P 500 index includes 500 large capitalization stocks in the United States. Other common large capitalization index funds include the Dow Jones Industrial Average, the Wilshire 5000 and the Russell 3000. The NASDAQ website lists all of the available indexes and their corresponding stock tickers. Investors must first sign up for an account at a brokerage house such as E*TRADE, OptionsHouse, Scottrade or Schwab before investing in these funds.
Investors can compare an industry index fund to a much larger benchmark such as the S&P 500, states U.S. News & World Report. Each index fund comes with associated costs which are measured as expense ratios. Funds with lower expense ratios yield a higher return and are thus more attractive to investors. Another approach involves investing in funds that are associated with companies paying regular dividends, reports Kiplinger.