Why Index Funds Win
Owning the whole market beats most professionals.
An index fund holds every company in a market index (e.g. the S&P 500). Two reasons it wins:
- Low fees — a 0.03% expense ratio vs 1%+ for active funds compounds to hundreds of thousands over decades
- Diversification — when one company fails, hundreds of others carry the index
Over 20-year windows, over 90% of active fund managers underperform a simple S&P 500 index fund.