It’s pretty easy to understand the appeal of indexing, particularly after a year like 2014. Less than one out of five active mutual fund managers
beat their respective benchmark last year. And those few that did beat
their benchmarks did so by a pitiful margin of just 1.8% on average.
Even
worse, many fund managers are really just closet indexers. There is too
much career risk in going against the grain, so most large fund
managers tend to buy the same stocks and sink or swim together. So … why
pay steep fees to active managers for underperform when you can buy an
index mutual fund or ETF with expense ratios of 0.1% or even lower in
some cases? (more)
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