Index funds are those funds that seek to
track the returns of the market benchmarks, such as the Wilshire 5000 and S
& P 500 Index. Although many fund managers claim to outperform the market
through experience and forecasting, a combination of cost savings,
diversification and longevity had helped to keep index funds’ returns float to
the top rankings. By using simple quantitative evidence, this paper explained
in plain language how investing in index funds can help investors get ahead of
the majority of fund managers in terms of consistent returns. The paper equally
explained why index funds are likely to continue to outperform not only the
average mutual funds but also the conventional stocks and bonds, both in the
bull and bear markets.
References
[1]
The Economist (2013) The Spanish Economy.
http://www.economist.com/news/europe/21578394-spains-pain-likely-continue-despite-some-promising-reforms-unless-new-sources-growth
[2]
The Economist (2013) Cyprus.
http://www.economist.com/news/leaders/21576676-outlook-cyprus-dire-time-think-again-about-reunification-divided-they-fall
[3]
The Economist (2013) European Economy Guide.,
http://www.economist.com/blogs/graphicdetail/2013/07/european-economy-guide
[4]
Kurtz, A. (2013) U.S. Economy Looks Weaker as GDP Is Revised. CNN Money.
http://money.cnn.com/2013/06/26/news/economy/gdp-revisions/index.html
[5]
Pareto, C. (2009) Investment Facts: What Is an Index Fund? Comment on the U-Tube.
http://www.youtube.com/watch?v=h9pwCfPdRMI
[6]
Silverblatt, R. (2012) Index Funds Still Beat Most Managers. U.S. News Money.
http://money.usnews.com/money/personal-finance/mutual-funds/articles/2012/10/12/study-active-funds-consistently-fail-to-beat-benchmarks
[7]
Evans, E.R. and Malkiel, B. (1999) The Index Fund Solution: A Step-By-Step Investor’s Guide. Simon & Schuster, New York.
