New US data released earlier this week shows that index investing beat actively-managed mutual funds for every market sector studied over the past five years - and the results are similar for the previous five-year period, too.
“The belief that bear markets strongly favour active investing is a myth,” says Srikant Dash, global head of research and design at Standard & Poor’s, in the latest Standard & Poor’s “Index versus Active” report.
Do I think this style of investing is right for everyone? Maybe not. (But I’m not everyone!) Am I giving up alpha? Probably.
But here’s the main reason I invest this way: it beats most of the readily-available alternatives, most of the time. And the reality is that I only have a limited amount of time to spend thinking about investing.
I’d way rather research recipes and contemplate my garden than track stocks or pay an advisor to pick mutual funds for me. For me, and arguably for most people like me, passive investing using index funds is the most appropriate solution.
But the whole mutual funds industry is pretty much set up to provide anything but index funds, meaning that most index investors are DIYers. I’ll be coming back to the theme of index investing, including lots of info on DIY investing, as the days roll by. Stay tuned!
-
It would be nice if you supplied the ability to subscribe by email to your posts, as I don’t know about RSS feeds… thanks…
2 comments
Comments feed for this article
Trackback link: http://monkeysjumping.com/wealthy-baker/wp-trackback.php?p=78