10-26-2014, 09:41 AM
Your right that a bucket fund would no longer be an index fund; however, it could share the characteristics of low expenses, a diverse set of stocks, and a weighting strategy. An index fund adds or subtracts capital using a given weighting strategy over the entire fund, keeping the relationship with the index. A bucket fund adds or subtracts capital from half of the fund at a time with stocks moving between buckets over time; therefore, it can not match the index. The hope is that the bucket fund would improve on the performance of an index.