The Biz Bucks Blog provides former Biz Bucks students and other busy professionals with a summary and commentary of seminal articles from the opinion pages of the Wall Street Journal. You can be notified of a new posting by subscribing to the blog (enter email in box on right) or by following on Twitter: @BizBucksGuy.
Index Investing on the Rise December 5, 2016 11:00 AM | Tagged as Indexing
WSJ 10/18/2016, “Wall Street’s “Do Nothing” Investing Revolution”, by Dennis K. Berman and Jamie Heller
WSJ 10/18/2016, “The Dying Business of Stock Picking” by Anne Tergesen and Jason Zweig
WSJ 10/18/2016, “Index Funds Are Taking Over The S&P 500”, by Tom McGinty, Sarah Krouse and Elliot Bentley.
The Biz Bucks Guy has written three posts on the passive investing strategy called Indexing. [You can search for them by inserting INVESTING into the category box.]
Today, the WSJ published another series of articles about indexing. The statistics show that major 401(k)s, pension funds, and endowments, and retail investors are giving up on stock picking. The data shows that in the past decade some three of four actively managed mutual funds have either closed completely or significantly underperformed passive index funds. The market has discovered this. Massive amounts of investment dollars have flowed out of actively managed funds into index funds.
Over the past five years only 11.2% of active funds have beaten the S&P 500 Index Fund.
The biggest passive portfolio, Vanguard’s Total Stock Market Index Fund, now has $469 billion. That’s about the same size as the four largest actively managed funds.
Furthermore, the cost to invest in passive funds is about 1/30th of the cost of active funds. And the active funds provide no measurable improvement in performance.
The Biz Bucks Guy does not give out investment advice. You are on your own. But, everyone should know about this option of using passive managed funds as a part of your portfolio.
[Although opinion is included, The Biz Bucks Blog is primarily written to former students of Biz Bucks training courses to encourage their daily reading of the three opinion pages of the WSJ. This refreshes principles of Biz Bucks courses and improves business acumen on topics not discussed in Biz Bucks training.]
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