Most Arguments Against Index Investing Aren't Compelling
A closer look at the merits of common arguments against index investing.
A version of this article appeared in the September issue of Morningstar ETFInvestor newsletter. Click here to learn more.
There's a lot to like about index investing. Market-cap-weighted index funds harness the market's collective wisdom, they tend to enjoy a sizable cost advantage over their active counterparts, and they avoid key-person risk. They've put downward pressure on fees across the entire asset-management industry, which has also helped investors in actively managed funds. But not everyone is a fan. Here's a closer look at some arguments against index funds. Most aren't compelling.
Alex Bryan has a position in the following securities mentioned above: USMV. Find out about Morningstar’s editorial policies.