Which financial product is suitable for replicating a stock index?

Exchange-Traded Funds (ETFs) are specifically designed to replicate a stock index by holding the same stocks in the same proportions as the index itself. This allows investors to gain exposure to a broad market segment without needing to purchase each individual stock. The structure of ETFs enables them to trade on an exchange like stocks, providing liquidity and ease of access, making them a popular choice for investors looking to match the performance of a specific index.

Mutual funds can also replicate stock indices, but they are generally bought and sold at the end of the trading day at the net asset value, rather than being traded on an exchange throughout the day like ETFs. This can lead to differences in trading flexibility and price discovery.

Bond funds focus on fixed income investments and do not track stock indices, making them unsuitable for replicating the performance of a stock index. Real Estate Investment Trusts (REITs) invest primarily in real estate and real estate-related assets, which is distinct from replicating stock indices that are based on equities.