![]() Returns may not always be higher with index funds, but for the most part, active fund managers fail to beat benchmark indexes most of the time. Beat actively-managed funds: Passively-managed funds beat actively managed funds because of the fees and additional costs incurred.Index funds let you hold stocks from hundreds of companies rather than focusing on a few from one industry or company. Diversity: Index funds can provide diversity that funds full of hand-picked stocks may not.This keeps the investors from having several taxable events and racking up capital gains without cashing in their stocks. Less expensive: Apart from fees, index funds have much less turnover than actively-managed funds.Investors can easily read through the prospectus and reports and find funds that fit their interests and goals. Stocks on indexes have already gone through rigorous evaluation and weighting. Easy for new investors: New investors, or those with limited capital, knowledge, and time, benefit from index funds because there is no need to analyze stocks to find ones that suit them.This means index funds are passively managed and don't need as much attention as those that don't track indexes. Lower fees: Index funds can charge lower fees because, with few exceptions, they track an index that is only changed if a stock listed on the index no longer meets the criteria for being listed.
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