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So why do many investors persist in paying for actively managed funds, when cheaper index funds are likely to deliver higher net returns over time?
At a time when ever more investors are shunning active management altogether in favour of cheaper index funds, the end of Mr Gross's reign at PIMCO may also mark the end of the era of the superstar fund-manager that he personified.(Photo credit: Reuters).
Moreover, if you hold a large selection of actively managed equity mutual funds with the same objective, Edesess says, the net result might look a lot like owning a far cheaper index fund.
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Cheaper index-linked products such as exchange-traded funds have also undercut the money-management business.
More immediately, savers may want to use cheap index funds rather than pricey funds stuffed with charges.
Choose between cheap index trackers which match the performance of indices such as the FTSE 100, or pricier "actively managed" funds.
But once again the cheap "index" funds have given investors the best returns, prompting many to conclude that paying a fund manager to look after your money just isn't worth it when computers do it better.
Do these donors beat cheap index funds?
Cheap index funds dominate the list of low cost funds.
Put half your money in a cheap index fund.
The cheapest index fundslike the SPDR (SPY, 113)take only a hair off.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com