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Please note that information herein is obtained from sources we believe to be reliable and accurate, but we do not guarantee it as such. This is not a research report, nor a product of any research department. Prices of funds and their availability may change without notice. Changes to assumptions may have a material impact on results. This is not an offer, recommendation or solicitation to buy or sell any financial product. You are responsible for analyzing any proposed trade in the context of your objectives, overall portfolio, liquidity and risk tolerance.
Of course Index Funds are not a cure-all for investors seeking to earn good returns in the markets. Index Funds often perform better than the majority of non-index funds that strive to beat the market in addition to the Lower fees that they offer investors. Even when a non-index fund out-performs index funds, it must perform better by a certain margin to generate returns that overcome the fees that they charge.
Index Funds are designed to match the investment result of a specific market index. An index fund can include either stocks or bonds in its portfolio, and these mutual funds vary in the investment strategy that they employ to achieve returns in line with their chosen index. The difference in Index Funds and Non-Index Funds is that Non-Index Funds seek to improve on market returns, they are actively managed and have higher portfolio turnover ratios, whereas Index Funds seek to align themselves with its index.
A central advantage to Index Funds is that they provide relatively low risks options for investing in stocks
and bonds which are designed for steady long-term growth. They are inherently diversified or industry targeted-representing many different sectors and industries. However they provide a level of diversification that can protect against deep losses.