which one can get the higher earnings, the index funds or the active funds?
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which one can get the higher earnings, the index fund or the active fund?
what are the long-term returns of index enhancement and excellent active fund managers?
Suppose we don't consider undervalued buying, overvalued selling, or profit-stopping strategies.
After holding a bull market for more than one or two rounds means holding it for a long time.
Generally speaking,
• index enhancement can outperform the index by 3% to 5%. This is probably the excess return that can be obtained by strengthening the index in history.
• excellent fund managers who have been selected can outperform the index by 5% to 7% in the long-term annualized history.
Reasons for differences
Why is this difference?
A very important reason lies in the rules of the Fund:
• the index and the index have been strengthened, and the proportion of stocks has always remained relatively high.
• for active funds, the share ratio can be adjusted, for example, it can be reduced to 70% or even lower.
▼ earnings at the beginning of the bull market
Index funds, index enhancement funds, active funds, and stock ratios can reach more than 90%.
In this case, they can get the benefit from the rising market.
▼ earnings in the middle and later stages of the bull market
Assuming the situation of 5000 or 6000 points in 2015, index funds and index enhancement funds cannot reduce the proportion of stocks, and still, need to maintain a high proportion of stocks at the high level of the bull market.
Excellent active fund managers can choose to reduce the proportion of stocks. For example, fund managers with a balanced style will do so.
This is equivalent to stopping profits at a bull market high and earning an additional part of the income.
Is it impossible for index funds and index enhancement funds to earn this part of the additional income?
In fact, it's not, but investors need to operate it manually at this time.
For example, at this time, if investors can redeem manually in time, they can also put this part of the income into their pockets.
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