Active vs. Passive
What is active management and what is passive management? Learn more about the continuing debate of active versus passive investment management.
What Is an Index Fund?
An index fund is a type of fund that is intended to track the returns of a market index. An index fund is considered to be passively managed because the portfolio manager is replicating the index, rather than trading securities based on his or her view of the potential risk/reward characteristics of various securities.
An index fund is a type of fund that is intended to track the returns of a market index. An index fund is considered to be passively managed because the portfolio manager is replicating the index, rather than trading securities based on his or her view of the potential risk/reward characteristics of various securities.
Index Funds vs. Actively-Managed Funds
The evidence shows that there are good active managers, but finding such managers in advance of their outperformance is difficult. According to Vanguard, for the 10 years leading up to 2007, the majority of actively-managed U.S. stock funds underperformed the index they were seeking to outperform.
The evidence shows that there are good active managers, but finding such managers in advance of their outperformance is difficult. According to Vanguard, for the 10 years leading up to 2007, the majority of actively-managed U.S. stock funds underperformed the index they were seeking to outperform.
If You Can't Beat 'em, Join 'em
According to the folks at the Motley Fool, only ten of the ten thousand actively managed mutual funds available managed to beat the S&P 500 consistently over the course of the past ten years. History tells us that very few, if any, of these funds will manage the same feat in the decade to come.
According to the folks at the Motley Fool, only ten of the ten thousand actively managed mutual funds available managed to beat the S&P 500 consistently over the course of the past ten years. History tells us that very few, if any, of these funds will manage the same feat in the decade to come.
Index Funds - The Dumb Money Almost Always Wins
Joshua Kennon, Guide to Beginner's Investing at About.com, provides his take on why brilliant money managers have trouble beating index funds.
Joshua Kennon, Guide to Beginner's Investing at About.com, provides his take on why brilliant money managers have trouble beating index funds.
What Is The Difference Between Active and Passive Investing?
Dana Anspach, Money Over 55 Guide at About.com, gives her thoughts on the active versus passive debate.
Dana Anspach, Money Over 55 Guide at About.com, gives her thoughts on the active versus passive debate.