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Isnt that shown to be not true by how effective indexes are? The smart money is to assume you won't beat the market
by 8note 3y ago
Isnt that shown to be not true by how effective indexes are? The smart money is to assume you won't beat the market
- adrianmonk 3y agoI don't know that that's proven. I think it has been shown that index mutual funds generally do as well as actively managed funds. One explanation is that the fund managers don't know better than anyone else. Another explanation is that the fund managers do know better, but their fees are so high that it cancels out the benefit of their expertise. That is, their expertise is real but overpriced. On a practical level, there's also the matter that, even if some fund managers do beat the market, some other fund managers don't, and it's hard to tell which is which. By going with an actively managed mutual fund, you take on "how do I know my fund manager is one of the good ones?" risk, which you don't have with index funds.