Index investing is not for people who can manage a stock PF, it is for people who want to participate in the markets via a diversified basket of companies, and this basket whose components from time to time, has the history of delivering inflation beating returns, although in a non linear fashion, without worrying about the issues that exist with active funds. As passive investors value time more than return, or are content with the return that an index provides, they don’t look at the performance of stocks, they look at the performance of the whole index, and if it is a market weighted index, there is always the chance of the larger companies dragging the return, so one can look at equal weight indices, but the return will be limited, as the weight is limited. We have many options with indices too, vanilla, equal weight, factor based, sectoral, many.
If one can manage a stock PF, then as we know, we can do this in many ways, which is evident in VP with members having many approaches.
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