Whats the rationale for index investing?
Index based investments have grown in popularity since their introduction over 30 years ago. Index funds offer several benefits. The typically low portfolio turnover of index funds leads to less capital gains and thus to expected tax efficiency. Indexing also allows for lower research and operating costs charged to shareholders. Most importantly, index funds usually outperform managed funds concentrating on the same industries or markets. Over the long term, investors of index funds should benefit from expected tax efficiency and market-tracking performance. However, you should be aware that there is no assurance the fund will be successful in achieving its objective.
