6. Index Trackers vs Managed Funds

The Motley Fool

Whether index trackers are better than managed funds is the cause of a fair amount of controversy in the world of investment. The evidence is fairly clear cut however, and it shows that index trackers beat the vast majority of managed funds over the long term.

For instance, a study by research firm WM Company found that 82% of managed funds failed to beat the market over the course of twenty years. While you may think that sounds bad, it's actually even worse, because this figure only includes funds survived for the whole twenty years -- many poorly performing funds are shut down or get merged into other funds.