Index Fundamentalism Revisited

Kenneth S. Reinker and Edward Tower

No 03-07, Working Papers from Duke University, Department of Economics

Abstract: Is there any justification for investing in managed mutual funds, or are managed funds for suckers, as indexing advocates argue? We answer this question by looking at a long time span of real fund returns (27 years) for one specific company (Vanguard) that is notable for its low fees on managed funds. By creating synthetic portfoliosóportfolios based on the assets of Vanguardís mutual fundsówe find that whether index funds or managed funds are the superior buy depends on the time span in question, but that managed funds almost always have a lower standard deviation of return than index funds.

JEL-codes: G11 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2003
New Economics Papers: this item is included in nep-cfn
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Working Paper: Index Fundamentalism Revisited (2004)
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