In terms of the growth (value of the fund), what is the difference between a dividend fund and an index fund?
Dividend funds are a type of mutual fund that aims to hold stocks in companies that pay large dividends. The value of a dividend fund depends on the value of the underlying stocks in the fund and the amount of dividend income earned by the fund.
Index funds are also a type of mutual fund but different than a dividend fund. Index funds aim to hold the same stocks or fixed income securities that make up a particular index (for example, the S&P/TSX Composite Index). The value of an index fund generally tracks the performance of the particular index and will usually go up or down as the index goes up or down.
Learn more about these and other types of mutual funds at GetSmarterAboutMoney.ca. Mutual fund companies are required to create a Fund Facts document for the funds they offer so that investors can easily understand the features of the fund at the time of investment. Use this interactive sample to learn how to read Fund Facts and see an overview of what information is found in the document.