The other thing to keep in mind that index funds slice and dice the market in many different ways. The classic "Index 500" fund is a market-cap weighted fund.

The other thing to keep in mind that index funds slice and dice the market in many different ways. The classic "Index 500" fund is a market-cap weighted fund. But there are many other types of funds. For example, Vanguard has 62 different index funds. And there are fundamental weighted index funds which, "...may be based on fundamental metrics such as revenue, dividend rates, earnings or book value". (http://www.investopedia.com/terms/f/fundamentally_weighted_index.asp http://www.investopedia.com/terms/f/fundamentally_weighted_i...) There are funds which take different selections of the market (top 1000 stocks or top 100 stocks, etc). So somebody might purchase an index fund and think they are investing passively, they are really actively choosing a passive strategy.