Index funds are designed to passively track specific markets. The S&P 500 tracks ostensibly tracks the approximate total average equity market growth in a reaso

Index funds are designed to passively track specific markets. The S&P 500 tracks ostensibly tracks the approximate total average equity market growth in a reasonably diversified manner, for example. However you can design any kind of index fund for any kind of market. Many other indices aside from the S&P 500 exist which are more or less passive depending on the process and criteria used for inclusion. Since no index has absolutely no fees, it's considered acceptable to state that indices return an average of some sort of market - with the proviso that it's actually slightly less fees and costs. EDIT: Based on your reply to a sibling commenter it seems like you're taking issue with the claim that indices tracking a market can't be beaten by active investing in that market. I agree; to wit: that's not a defensible claim without assuming EMH, as you say elsewhere. But that doesn't change the fact that indices (ostensibly) return an approximate average of a market.