Do Passives Increase Risk

Thrugelmir

EJS_Superted wrote: »

When you track an index you buy every stock with no consideration of value for money and you buy more of the larger companies than the small ones.

Not all tracker funds mirror an index 100%. Be too expensive in trading costs to constantly rebalance the portfolio with 100 share holdings.

firestone

bostonerimus wrote: »

If you don't believe in efficient markets then you should not be investing in passive indexes.

while the tracker may efficiently follow the markets i would question how many people in passive indexes understand the market in the first place (but realize some people have been investing for years and can see the benefits) as there pushed as a no knowledge product in some areas

bostonerimus

firestone wrote: »

while the tracker may efficiently follow the markets i would question how many people in passive indexes understand the market in the first place (but realize some people have been investing for years and can see the benefits) as there pushed as a no knowledge product in some areas

You could say the same for active funds.....in fact I think many investors go active because they feel that they are putting money in a fund that will be managed for them.

firestone

bostonerimus wrote: »

You could say the same for active funds.....in fact I think many investors go active because they think that they are putting money in a fund that will be managed for them.

by putting money in active it would be managed for them-i guess you mean successfully which would be a different argument