Not all low-cost indexes exhibit the same risks and opportunities

Investopoly · Jun 24, 2020 · 24m

Over the past decade, investors and large institutions have been deserting expensive active fund managers in return for using their cheaper index equivalents.According to Morningstar, investors in the US withdrew $USD204 million from actively managed investments (net) in the 2019 calendar year. However, low cost index funds continued to grow in popularity receiving (net) $USD162 million of new money. The transition away from active management into low-cost index funds has been happening for over a decade.Whilst it is true that traditional market cap indexing has outperformed many professional…