"Here's a piece a reader pointed to that details many of the benefits of index investing from the NY Times. I'll highlight a couple of their main points including how indexing out-performs most actively managed funds on a regular basis: This year through September, only 28.5 percent of actively managed large-capitalization funds — which try to beat the market through stock selection — were able to outpace the S.& P. 500 index of large-cap stocks, according to a new study by S.& P. In the third quarter alone, it was even worse, with only one in five actively managed large-capitalization funds beating the index. Over the five years through the end of the third quarter — a span that included both bull and bear markets — only 29.1 percent of large-cap funds managed to beat the S.& P. 500. What’s more, only 16.4 percent of mid-cap funds beat the S.& P. 400 index of mid-cap stocks, and 19.5 percent of small-cap funds outpaced the S.& P. 600 index of small-company shares. “The long term does seem to favor the indexes,"We will be using this in all classes before the year is out, for right now it might be of most interest to SIMM.
Saturday, September 29, 2007
Free Money Finance: Index Investing Out-Performs Most Actively Managed Funds, Costs Taxes are Why
Free Money Finance: Index Investing Out-Performs Most Actively Managed Funds, Costs Taxes are Why: