Index Funds Perform Poorly
Millions of investors prefer index funds and exchange traded funds. Passive funds have mounted from 3% to 20% of all the mutual funds. Index funds have beaten active funds.
Index funds are the preferred choice of many sophisticated investors. But they might not be aware of the fact that some index funds delivered poor returns.
It has been noted that active funds ran hot and cold, while index funds were consistently superior.Funds with low expense ratios beat the ones with high expense ratios. This lies true in case of active and passive funds.
Some index funds charge small fees of less than 0.15%, and these type of funds can be sound investments. But the average index fund has an expense ratio of 0.62%. Many top active funds have fees that are comparable to the index average.
