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What you're actually buying

An index is a rule for selecting and weighting companies. Two indices described as broad can hold very different things — including the one called world.

When you buy an index fund, you are buying a rule.

The rule decides which companies are included and how much of each. That is why two indices that both sound global can behave very differently, and why the name on the fund is a poor guide to what you own.

Witan Way is an independent, rules-based investing education platform. Nothing published constitutes personalised investment advice, a solicitation, or a recommendation to buy or sell. Capital is at risk. © Witan Way.