In recent years, the growing popularity of index investing has gained momentum and index funds have experienced an exceptional increase in assets under management (AUM).
This growth has pushed down fees for investors, while also commodifying single asset class index tracking strategies.
In contrast, differences among diversified passive funds have been proliferating due to the growing number of funds offered to investors and the absence of any industry standards around how they should be managed.
This means that seemingly similar diversified index funds can have significant differences in performance. It’s critical investors understand that deviations in performance can occur and to be aware of the underlying causes.
Not all diversified index funds are created equal. Investors should make sure the diversified fund is aligned to their needs and suitable for their circumstances. Equally important is selecting a manager with the expertise, experience and resources to successfully navigate these issues.
To help navigate this complexity, here are 10 important things to consider when choosing a diversified index fund.
Important information
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