index tracking funds

Why investors should not fixate on falling passive fund fees

Academic finance is now dominated by the ‘efficient market’ hypothesis. Try as they might, the theory goes, active fund managers almost never outperform the market over the long term. Investors, therefore, have no hope of beating the markets, so they are better off sticking their cash in either index trackers or exchange traded funds (ETFs). Acceptance of this theory has played no small part in an explosion in the popularity of passive investing over the past decade.