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If you can't beat them, why not join them! This is the basic principle behind Index Funds. Since most Fund Managers
can't beat the Index that is their barometer, doesn't it make since to just mirror the index with a fund? That idea has become
more and more popular over the last few years. The costs are cheaper and there is much less work involved in managaging the portfolio.
Many professional investors will only buy index funds and not regularly managed mutual funds. They do have a good arguement.
Why should you pay someone who consistently underperforms the market? At least with an idex fund, you will have similar results as the market.
How can a fund manager justify his worth if he/she can't show similar or better results than the overall market? Well, about
60 - 70% of them fall into this category.
Below are the links into websites that contain information on Index Funds:
Latest News on Index Funds
Check the Latest News Stories on Index Funds from Google. Two Investment Gurus: Index Funds are Path to a Winning Investment Investors should steer clear of actively managed mutual funds, hedge funds and ETFs. The best path to take is the one that leads them to a globally diversified portfolio of index funds. So said Mark Hebner, author of Index Funds: the 12-Step Program for Active Investors and Vanguard founder and author of a number of books on index fund investing, John Bogle. (Bogle reiterated his views in a speech he delivered at the American Association of Individual Investors in May 2005.) Morningstar Study: Short-term Buying and Selling Equals Lower Returns The study showed that returns earned by fund investors were worse than funds' official or advertised returns. The difference had to do with the length of time shareholders held onto their fund shares and the timing of their purchases and sales, the study reports. The Myth of Fund Ratings “And that's how we rate mutual funds. Any questions?” the teacher asked. My hand shot up immediately. I had been recently hired by a popular investment advisory company. While undergoing their training process, I was exposed to their faulty methodologies. They claimed to put investors first and I joined the firm for precisely that reason. But after a short period of time, I realized that their interest in helping investors was little more than a beautifully constructed façade. Index Funds.com Index Funds.com is a comprehensive resource on index funds investing, promoting a commonsense approach that seeks to maximize expected returns at each level of risk ultilizing index portfolios. An index fund can be defined as a mutual fund or exchange traded fund (ETF) with a clearly defined set of rules of ownership, that are held constant regardless of market conditions. The fund does not have to follow a well known index. An extensive database of index funds articles and data include information on Dimensional Fund Advisors (DFA investments or funds), Vanguard, Barclays, and most other index funds. There are about 700 index funds today. The S&P 500 Index Fund Many stock investors turn to the letters Warren Buffett, CEO of Berkshire Hathaway (NYSE: BRK.A and B), writes every year to Berkshire's shareholders for some of the most valuable stock investing lessons available anywhere. But mutual fund investors have their own Buffet in John Bogle of the Vanguard Group, whose Common Sense on Mutual Funds contains a distillation of facts, figures, and analysis on mutual funds and are the most comprehensive and useful education that a mutual fund investor can acquire. Fools are certainly indebted to John Bogle, for showing clearly that -- contrary to what you may have read on countless magazine covers -- mutual fund investing is extremely simple: Buy an index fund. Index Funds Advisors (IFA) Index Funds Advisors (IFA) is a fee-only independent financial advisor that provides wealth management by utilizing risk-appropriate, returns-optimized, and tax-managed portfolios of index funds. IFA founder, Mark Hebner and the team at IFA have done extensive research as shown on this web site and the #1 ranked book on index funds. This research leads our clients to the optimal money management strategy, net of our advisory fees and taxes. IFA completely avoids the futile, speculative, and unnecessary cost-generating activities of stock, time, manager, and style picking. Instead, our investment strategy employs a disciplined, quantitative approach, emphasizing broad diversification and consistent exposure to the structural trends of publicly traded markets around the world, with an overweighting of small and value priced companies. In short, we invest in capitalism. Index Funds from SEC.gov "Index fund" describes a type of mutual fund or Unit Investment Trust (UIT) whose investment objective typically is to achieve the same return as a particular market index, such as the S&P 500 Composite Stock Price Index, the Russell 2000 Index, or the Wilshire 5000 Total Market Index. An index fund will attempt to achieve its investment objective primarily by investing in the securities (stocks or bonds) of companies that are included in a selected index. Some index funds may also use derivatives (such as options or futures) to help achieve their investment objective. Some index funds invest in all of the companies included in an index; other index funds invest in a representative sample of the companies included in an index. Learn About Index Funds Lesson One: Efficient Portfolios of Indexes - The first lesson for index funds investors is to understand the value of a globally diversified portfolio of index funds, tilted toward small and value indexes. Indexfunds.com and Index Funds Advisors, Inc. has identified a set of 20 efficient portfolios which provide among the highest level of returns documented over 33 years, at each level of risk*. An investor only needs to determine where they should be on the scale of 3 to 16 standard deviations, which has been converted to portfolios numbered from 5 to 100. The starting point for that determination is the Risk Capacity Survey.
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