Vanguard is paying homage to its index investing roots, 35 years after launching the first index mutual fund.
A new section of Vanguard’s website features articles, research, and videos on index investing by top strategists at the nation’s largest fund company.
The broad message is this:
Most investors should choose index funds that simply ride the markets, rather than try to beat the market by paying an investment-picking pro.
Over the long haul, the lower fees that index funds charge are likely to offset any advantages that managed funds achieve through investment selection, index advocates say.
They point to research showing market-beating performance by managed funds is almost always fleeting, measured against the decades needed to save for retirement.
Index and managed funds can complement one another, he says, because they seek different goals: “They’re not oil and water, but more like peanut butter and jelly,’’ he says. An investor’s portfolio can benefit from managed funds, provided they charge relatively low fees, Sauter says.
Indeed, Vanguard embraces a mixed approach in its fund lineup. Twenty-nine of its stock funds are managed. Overall, managed funds account for 44 percent of Vanguard’s $1.6 trillion in US fund assets, with index funds making up the rest.