Mark Riddix

The Fall of Index Funds

I did not state that one fund will beat all index funds. I used Vanguard because it is one of the larger fund companies. I looked at Fidelity, T Rowe Price, Legg Mason and others. There are a vast array of index funds that track different benchmarks.
And of course all sectors will not perform poorly. Some of the sector index funds, energy funds and REIT index funds have performed just fine. I am only referring to index funds that track the overall stock market's performance such as the S&P 500, Dow Jones, Wilshire 5000.

Too many investors rely solely on a stock market index fund as the one stop solution to investing. I believe investors will be better served by taking a more active approach to investing. I do not think it is unreasonable for investors to expect a positive rate of return over any 10 year period.


On Dec 02 02:39 PM Kyle Waller wrote:

> 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.