Kyle Waller

The Fall of Index Funds

Mark,
You say a lot of things. I think there is a lot investors don't understand about indexing. I also think some of the things you said were right yet still uninformed. Index Funds do not make any investment decisions and to say that index fund performance will continue to be poor is saying that all sectors, asset classes, and countries in the world will have, on aggregate, poor performance. This may be your opinion.

You say you expect a, "conservatively managed balanced fund with a low expense ratio" to beat an index fund over the next few years. Sir, There are hundreds of index funds, will your fund beat all of them? Maybe you only mean an index in the same peer group. If that is the case, a better comparison would be to compare a mix of index funds, weighted to match your conservative mutual fund's asset allocation.

I know this is a lot but I'd like to make the point that indexing is more complicated than just comparing a conservative mutual fund with 40% bonds, to the S&P 500.