Conclusion: A Case for Index Fund Portfolios

What you have all been waiting for - the conclusion to the Case for Indexing Whitepaper.  Take a look and feel free to reach out with questions or if you want to get started with your own Zero Commission Portfolio.


final investment article

Mutual fund portfolios holding only index funds have performance advantages over comparable portfolios that hold only actively managed funds. These advantages were quantified by running several scenarios that measured and compared strategy performance over time, both 
nominally and risk-adjusted. 

During this analysis, three Passive Portfolio Multipliers (PPMs) were isolated that enhanced the probability of outperformance by all index fund portfolios. These multipliers illustrate how the chance of index fund portfolio outperformance increases as funds are combined in a portfolio, as the holding period increases, and as the number of actively managed funds in each 
asset class increases. 

This study has important strategy implications for investors. Those currently holding actively managed fund portfolios can increase the probability of meeting their investment goals by switching to an all index fund portfolio. Those who own two or more actively managed 
funds in each asset class category would benefit significantly by switching to index funds in each asset class category. 

A diversified portfolio holding only index funds in all asset classes is difficult to beat in the short-term and becomes more difficult to beat over time. An investor increases their probability of meeting their investment goals with a diversified all index fund portfolio held for the long term.

B. Walking Eagle

Plymouth Minnesota

B. Walking Eagle is a monument of intellect and has spun with golden thread.