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Course 303: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Choosing an Index Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Index funds make low-maintenance investments. You don't need to worry about a manager changing his/her strategy: Because index funds rigorously track specific indexes, the manager doesn't have much say in the matter. Don't fear that your manager will leave for greener pastures, either: Index-fund managers aren't actively selecting stocks, so it doesn't matter much who is calling the shots. Finally, asset growth isn't an issue: Because indexing is a relatively low-turnover approach, index funds don't suffer under the weight of too many assets. Choosing an index fund isn't such a snap, though. More than 250 index funds ply their trade in more than 45 different investment categories. To complicate matters, some investment categories (such as large-blend) have multiple index funds, many of them locked to a different benchmark. It's getting so you can't tell the players without a program. To simplify the process of choosing an index fund that meets your needs, consider the following suggestions. Next: Know Which Index the Fund Follows >> |
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Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores. | ||
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