Indexing is based on the theory that investors as a group cannot beat the market - because they are the market. This means they invest in all or most of the securities in the index. Rather than trying to guess which investments will outperform in the future, index managers replicate a particular market or sector. How is indexing different to active management?Īctive fund managers try to outperform the index by picking sectors and securities they believe will outperform in the future. Indexes cover almost every industry sector and asset class, including Australian and international shares, property, bonds and cash. Most investment markets have indexes that measure their value over time. Index funds are a way of gaining exposure to an investment market. Introduction to indexing What are index funds?
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