Index funds jump onto risky ground

Index funds jump onto risky ground
Morningstar results suggest many index funds today carry more active risk, less diversification, poor performance prospects and likely higher fees than investors expect. (Image: Getty)
David Chaplin
Vanguard launched the first index fund this month 47 years ago, heralding the era of passive investing. Carrying the historically self-aware name of ‘First Index Investment Trust’, the then-kooky Vanguard fund tracked the 500 biggest US stocks according to their respective market values. Nothing much happened for a couple of decades. By 1998, the passive fund population reached about 200, according to Morningstar data, as the index religion slowly drew investors and new managers to the fold. But the late 1990s ma...

More Opinion

First cut: how DIMS measure up
Opinion

David Chaplin: First cut: how DIMS measure up

The public might benefit from knowing the average cost of discretion.

David Chaplin 30 Oct 2024
The health and safety sledgehammer
Opinion

Paul McBeth: The health and safety sledgehammer

Weighing up risk and reward in a world trying to ensure crime doesn’t pay.

Paul McBeth 29 Oct 2024