Editing Passive management (section)

===Implementation vehicles===
Passive management can be achieved through holding the following instruments or a combination of the following instruments.<ref name=":1" />

'''Index funds''' are mutual funds that try to replicate the returns of an index by purchasing [[Security (finance)|securities]] in the same proportion as in the [[stock market index]].<ref name="nine">John Bogle, Bogle on Mutual Funds: New Perspectives for the Intelligent Investor, Dell, 1994, {{ISBN|0-440-50682-4}}</ref>  Some funds replicate index returns through sampling (e.g., buying [[stock]]s of each kind and sector in the index but not necessarily some of each individual stock), and there are sophisticated versions of sampling (e.g., those that seek to buy those particular shares that have the best chance of good performance). [[Investment fund]]s that employ passive investment strategies to track the performance of a [[stock market index]] are known as [[index fund]]s.

'''[[Exchange-traded fund]]s''' are open-ended, pooled, registered funds that are traded on public exchanges. A fund manager manages the underlying portfolio of the ETF much like an index fund, and tracks a particular index or particular indices. "Authorized participant" acts as market makers for the ETF and delivers securities with the same allocation of the underlying fund to the fund manager in exchange for ETF units and vice versa. ETFs usually offer investors easy trading, low management fees, tax efficiency, and the ability to leverage using borrowed margin.

'''Index futures contracts''' are [[Futures contracts|futures contacts]] on the price of particular indices. Stock market index futures offer investors easy trading, ability to leverage through notional exposure, and no management fees. However, futures contracts expire, so they must be rolled over periodically for a cost. As well, only relatively popular stock market indices have futures contracts, so portfolio managers might not get exactly the exposure they want using available futures contracts. The use of futures contracts is also highly regulated, given the amount leverage they allow investors. Portfolio managers sometimes uses stock market index futures contracts as short-term investment vehicles to quickly adjust index exposure, while replacing those exposures with cash exposures over longer periods.

'''Options on Index Futures Contracts''' are options on futures contracts of particular indices. Options offer investors asymmetric payoffs that could limit their risk of loss (or gain, depending on the option) to just the premiums they paid for the option. They also offer investors the ability to leverage their exposure to stock market indices since option premiums are lower than the amount of index exposure afforded by the options.

'''Stock Market Index Swaps''' are swap contracts typically negotiated between two parties to swap for a stock market index return in exchange for another source of return, typically a fixed income or money market return. Swap contracts exposure investors to counterparty credit risk, low liquidity risk, interest rate risk, and tax policy risk. However, swap contracts can be negotiated for whatever index the parties agree to use as underlying index, and for however long the parties agree to set the contract, so investors could potentially negotiate swaps more compatible with their investment needs than funds, ETFs, and futures contracts.