Why Indexing Works

From the research done in the past several years, Indexing has emerged as a proven investment strategy. Indexing has consistently produced higher rates of returns than most active management programs. Indexing embraces the Efficient Market Hypothesis. Efficient Market Hypothesis simply means that the current market price of a share reflects all currently available information that might affect its market value. The chances of one failing in individual stock picking and market timing are much greater than one succeeding. After deducting all the fees and high trading costs involved with active management, returns are usually less than that of a specific index.