I remember a securities industry conference many years ago when the subject of index funds came up.
“Why,” sneered a leading executive at a major brokerage firm, “would anyone invest in a fund that guaranteed average performance?”
How times have changed and how the tables have turned.
Active vs. Passive
Millions of American investors have learned through bitter and expensive experience that active management – the fancy name for the stock-picking and attempts at market outsmarting by legions of highly paid portfolio managers, market strategists and stockbrokers – rarely pays. And in droves, they’re cashing in their chips and buying the passively managed mutual funds and exchange-traded funds that track stock market indexes. The winner in this shift, of course, is the pioneer of passive investing, Vanguard.
