Do-It-Yourself (DIY) Investor: Clements on Index Fund Investors

Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at http://www.rwinvestmentstrategies.com. If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Monday, March 30, 2015

Clements on Index Fund Investors

Here's a nice piece by Jonathan Clements at MarketWatch on index fund investor performance versus active fund investor:

Are index-fund investors smarter?

The article presents interesting findings by Morningstar on dollar-weighted returns for active fund investors and index fund investors that support what we present here on an ongoing basis.

What interested me was his observation on why indexers tend not to jump in and out of the market at the wrong time. He observes that indexers have a single worry - the performance of the market whereas active fund investors have two concerns - the performance of the market and the worry of the active fund they are invested in.

Although he didn't mention it, this combined with the risk averseness of investors clearly makes active fund investing for many investors a real challenge - especially in volatile markets such as we have experienced recently!