Mutual Funds

Index Funds

Why are index funds attractive to many investors?

Kiplinger’s Personal Finance experts assert that index funds are a popular form of investment because some index funds have better returns than actively managed portfolios and have very low expenses related to managing the fund, so that the returns will be less impacted by expenses than actively managed funds. For example, typical index funds have expenses in fractions of a percent, whereas the average expense ratio of typical actively managed funds is 1.2%. Kiplinger’s also cited transparency as a main reason why individual investors seem to like index funds. When an individual investor decides to acquire shares in an index fund, he knows exactly what makes up the investment.


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