In by Kristia van Heerden

In the world of index-tracking investments, a vanilla index refers to an index weighted by market capitalisation. That means big companies take up more space in the index than small companies. It’s called ‘vanilla’ because it is the ‘plain’ kind of ETF.  The alternative to vanilla ETFs are ‘Smart ETF’s’ which use a range of different methodologies to select shares. This is covered in more detail in this post: Comparing ETFs: Methodology