Economics professor Mark J. Perry shared some investment facts on the occasion of “Eugene Fama winning the Nobel Prize of Economics, largely for his path-breaking academic finance research on market efficiency that ultimately led to the introduction of low-cost mutual funds by Vanguard and others that pursue a passive investment strategy of buying and holding portfolios of stocks that track an index like the S&P 500”.
Here’s one fact that should get every investor’s attention.
Empirical evidence shows that passively managed index funds outperform almost all actively managed funds over long holding periods, adjusted for risk, taxes and expenses.
I used to work for a mutual fund company with a winning fund manager who consistently outperformed the market over more than 30 years, but he was the exception. These days I’m a fan of index funds for most of my investing.
- Fama’s Nobel Work Shows Active Managers Fated to Lose (bloomberg.com)
- Average 529 savings reach all-time high (Cost of College)