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LamontCranston That's true with most funds, though. But there are several added advantages over mutual funds. Firstly, index funds have minimal management fees, which means they perform exactly as the market. It's a universal truth that mutual funds underperform the market over the long term by the amount of their management fees. Also, they don't buy a select few overpriced giants like mutual funds, who have to due the hundreds of millions of dollars under management; index funds by the index proportionately. Another advantage is that they do not specialize- so there are no tantrums with the "small-cap", "large cap", "tech stocks only". Buying an index fund means you buy the market at all levels. And this has shown to be a good strategy over the long run. It's an excellent choice for a passive, defensive investor, who simply wants little hassle and a satisfactory return