Index ETFs are funds designed to track a benchmark instead of trying to beat it through active stock picking.
What they actually hold
A broad index ETF may hold a large basket of companies that roughly mirrors an index such as the S&P 500 or a total market benchmark.
Why fees still matter
Even a small expense ratio compounds over time. Lower-cost broad index ETFs often appeal to long-term investors because they keep more money invested.
Bottom line
Index ETFs work by packaging broad market exposure into one tradable fund, which is why they are such a common beginner building block.