STREET DOGS: Reasons not to invest in passive funds
The only valid reasons for not joining the indexing party, from MarketWatch.com
From MarketWatch.com, the only valid reasons for not joining the indexing party:
1. You can’t stomach the ride: Index investing involves riding the market rollercoaster, and not everyone can do that. If you can’t invest without feeling every bump and dip and that action makes you sick, a manager may calm your fears. 2. You’re following a programme or plan where the type of fund is secondary to the allocation: One of the most popular investment options today is the target-date or life-cycle fund — which are built to suit investors of a similar age and which grow more conservative as they reach retirement. Using these funds is about finding the right allocation and glide path for your investments and you want active management adjusting the portfolio. 3. You are pursuing low-cost active strategies: The actively managed funds with the best chance of outperforming their benchmark have costs only fractionally higher than their index peers. If you like the idea of having a manager at the helm and steering a course, make it someone who acts more like a buy-and-hold ind...
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