An investment strategy that combines a short-term fixed income portfolio with an equity swap. The potential returns would exceed the returns from a portfolio exclusively consisting of stocks (an all-equity investment). This strategy can also be implemented by buying all of the components of a specific index, giving more weight to stocks or sectors with stellar performance. Moreover, performance may be boosted by investing in derivatives, such as options and futures. The enhanced index fund is a type of mutual fund that seeks to beat the performance of a given benchmark to an extent ranging between 0.1% and 2% (percentage higher than 2% transform it into a stock mutual fund).

An enhanced index fund consisting of an equity swap is also known as a cash/swap strategy.