Investors Gradually Becoming More Intelligent

By on September 1, 2010

Sam Mamudi reports that investors have been showing preference to index funds over actively managed stock funds the past several years:

Since the end of 2005, actively run U.S. stock funds have seen net outflows every year, totaling $369 billion, while indexed counterparts — not including exchange-traded funds — have seen net inflows of $112 billion, according to fund-industry trade group the Investment Company Institute.

Although this is not a huge change given investors still entrust $3 trillion to high expense, actively managed funds.

Total fees for the average traditional U.S. index fund — excluding derivatives-driven index funds — are 0.54%, compared to 1.41% for the average actively managed U.S. stock fund, according to Morningstar.

Source: Marketwatch
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