Index
Funds, What's the Good News:
Why
invest in an index?
A broad-market index matches as closely as possible the return of the
overall stock market. The Wilshire 5000 index closely matches the cumulated
performance of each of the 5000 Wilshire stocks. Sound pretty straight
forward but remember that over 80% of actively managed diversified large-cap
mutual funds have outperformed the S&P 500 over the last 10 years.
Index
Funds Save Money!
Index Funds consistently beat their actively managed counterparts because
they are cost-efficient. Index funds buy the stocks that make up the
index. No portfolio Einstein needed. No high-end salary, no year-end
performance bonus. This significantly reduces the operating fees and
greatly reduces the long-term net return to the shareholders.
Diversification:
When
you invest with an Index fund you are instantly diversified over that
indexes universe of stocks. While actively managed fund offer a similar
diversification, with the index funds you always know just how your
portfolio sits. Additionally, you can own multiple index funds diversifying
across different indexes with Index funds , and t here
are a whole bunch of them, as you can see from this comparison
table .
|
