What is the difference between an ETF and an index fund?

An ETF describes how the product is packaged and traded: it trades on an exchange throughout the day. An index fund describes a strategy: it aims to track a specific index.

Many ETFs are index funds because they track benchmarks like the S&P 500, total stock market, or bond indexes. But ETFs can also be actively managed.

You can also find index mutual funds. So the real choice is often between: index ETF vs index mutual fund, or passive vs active. The right answer depends on your account, your trading preferences, and costs.