What is the AEX?
You've probably heard of the AEX, which stands for Amsterdam Exchange Index. The AEX is a number that reflects the performance of the 25 largest companies listed on the Amsterdam Stock Exchange. As the shares of those 25 largest companies rise, so does the AEX. We invest in shares of companies included in similar, other indices. Such a collection of shares is called an index fund.
What is an index fund?
An index fund is composed of a specific group of shares or bonds. For example, an AEX fund consists of shares of the companies included in the AEX according to a certain weighting. For example, the AEX consists of 11% Shell and 6% Philips.
Using an index
An index is often used to measure stock market performance. If the AEX rises, we can say that the Dutch stock market is doing well. Worldwide, there are many indexes with different compositions. In America, for example, there is an agricultural index with shares of the largest listed companies in that sector. In Germany, they have the DAX, the German version of the AEX. If the DAX rises, we can say that the German stock market is doing well.
Investing across the market
An index exists to say something about a particular stock market. For example, we take the price of 25 shares listed on the stock exchange in the Netherlands, give them a certain weighting, and this creates an average price of all those shares: the AEX. You cannot invest directly in such an index, but you can invest in a fund that follows that index. We call this an index fund. If you invest in an index fund that follows the AEX, you invest in the 25 most traded companies listed on the Dutch stock exchange in the same weighting as the AEX: 11% in Shell, 6% in Philips, and so on.
Advantages of index investing
By investing in an index fund, you "follow" the market. You don't choose specific stocks, but invest in an entire market at the same time. Such an index fund is also called a tracker: a fund that follows the market. Investing in index funds is also called passive investing. Because you follow the market, you don't try to capitalize on market fluctuations, but wait quietly for your investments to grow in value.
Other benefits of index investing
First, there are low costs. You don't have to buy shares yourself, which saves transaction costs, and you don't have to pay a research team to invest your assets. Instead, you invest in a fund, investing directly in many stocks or bonds at once. This not only saves costs but also effort: you don't have to decide which stocks to invest in, but invest in the entire market. Moreover, investing in index funds provides a good spread of your invested assets, which lowers the risk.
What index funds do we offer?
We believe in a good spread of your assets and expert asset management, therefore we do not offer funds but have a close cooperation with a number of asset managers who take care of that part. We take care of everything else, so you keep one point of contact.