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

Wed, 02 Aug 2023

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...

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