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Index Fund Factor: The View beyond the Wall

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DOI: 10.4236/jss.2014.29033    5,030 Downloads   5,522 Views  
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ABSTRACT

Index funds are those funds that seek to track the returns of the market benchmarks, such as the Wilshire 5000 and S & P 500 Index. Although many fund managers claim to outperform the market through experience and forecasting, a combination of cost savings, diversification and longevity had helped to keep index funds’ returns float to the top rankings. By using simple quantitative evidence, this paper explained in plain language how investing in index funds can help investors get ahead of the majority of fund managers in terms of consistent returns. The paper equally explained why index funds are likely to continue to outperform not only the average mutual funds but also the conventional stocks and bonds, both in the bull and bear markets.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

Ojih, J. (2014) Index Fund Factor: The View beyond the Wall. Open Journal of Social Sciences, 2, 193-198. doi: 10.4236/jss.2014.29033.

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