An S&P 500 index fund within a 401(k) plan is a passively managed investment option designed to mirror the performance of the Standard & Poor’s 500 index. This index represents the 500 largest publicly traded companies in the United States, weighted by market capitalization. An example would be a 401(k) offering a “Vanguard 500 Index Fund” or a “Fidelity 500 Index Fund,” both tracking the S&P 500.
Choosing an S&P 500 index fund for retirement savings provides broad market exposure, diversification, and typically lower expense ratios compared to actively managed funds. Historically, the S&P 500 has delivered competitive long-term returns, making it a popular core holding in many retirement portfolios. The investment strategy centers around capturing the overall growth of the U.S. economy’s leading companies.
