Why Index Funds Get Better with Age

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Why Index Funds Get Better with Age

Postby Rick Ferri » Thu Apr 04, 2013 12:08 pm

Index fund returns keep getting better the longer you hold them. This is because low-cost index funds give you more of the market’s return and because many actively-managed funds eventually close or merge. A combination of cost savings and longevity help index fund returns float to the top in peer rankings.

Index Fund Returns Get Better with Age

Rick Ferri
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Re: Why Index Funds Get Better with Age

Postby alexost » Thu Apr 04, 2013 12:16 pm

Rick Ferri wrote:Index fund returns keep getting better the longer you hold them. This is because low-cost index funds give you more of the market’s return and because many actively-managed funds eventually close or merge. A combination of cost savings and longevity help index fund returns float to the top in peer rankings.

Index Fund Returns Get Better with Age

Rick Ferri


I would like to see figure 4 separate "closed" and "merged." Merging can (but not always) have have efficiencies that benefit the consumer. Am I missing something with lumping closed and merged into one category?

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Re: Why Index Funds Get Better with Age

Postby Rick Ferri » Thu Apr 04, 2013 4:09 pm

A very high percentage of closed AND merged funds have had multi-year underperformance versus their peer group before they disappear. A fund is very often at the bottom of its peer group for quite some time before a fund company merges it out of existence.

Mark M. Carhart documented the performance of closed and merged funds in his timeless study On Persistence in Mutual Fund Performance.

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Re: Why Index Funds Get Better with Age

Postby mickeyd » Thu Apr 04, 2013 4:36 pm

Index funds~ the gift that keeps on giving. :greedy
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Re: Why Index Funds Get Better with Age

Postby Rick Ferri » Fri Apr 05, 2013 9:21 am

Thanks for posting my article on the Bogleheads Guide Facebook page, Mel! :beer

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Re: Why Index Funds Get Better with Age

Postby Mel Lindauer » Fri Apr 05, 2013 1:57 pm

Rick Ferri wrote:Thanks for posting my article on the Bogleheads Guide Facebook page, Mel! :beer

Rick Ferri


Great article showing why investors should use index funds in their portfolio to gain financial independence. I thought it should be read by every investor I could reach, Rick, so I also posted it on Morningstar and on Twitter.

Keep up the good work!
Best Regards - Mel | | Semper Fi
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Re: Why Index Funds Get Better with Age

Postby Barry Barnitz » Fri Apr 05, 2013 3:52 pm

Mel Lindauer wrote:
Rick Ferri wrote:Thanks for posting my article on the Bogleheads Guide Facebook page, Mel! :beer

Rick Ferri


Great article showing why investors should use index funds in their portfolio to gain financial independence. I thought it should be read by every investor I could reach, Rick, so I also posted it on Morningstar and on Twitter.

Keep up the good work!



Hi Mel:

Is this it: bogleheads?

regards
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Re: Why Index Funds Get Better with Age

Postby Mel Lindauer » Fri Apr 05, 2013 4:26 pm

Barry Barnitz wrote:
Mel Lindauer wrote:
Rick Ferri wrote:Thanks for posting my article on the Bogleheads Guide Facebook page, Mel! :beer

Rick Ferri


Great article showing why investors should use index funds in their portfolio to gain financial independence. I thought it should be read by every investor I could reach, Rick, so I also posted it on Morningstar and on Twitter.

Keep up the good work!



Hi Mel:

Is this it: bogleheads?

regards


No, Barry, that's some imposter. Here's a link to my page (Bogleheads Guide) https://www.facebook.com/bogleheads.guide
Best Regards - Mel | | Semper Fi
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