They are another way for the casino to win the game
by The Flash (2018-12-10 23:01:10)
Edited on 2018-12-11 15:49:46

In reply to: Are index funds bad for the economy?  posted by SEE


They perform a legitimate and efficient function in the economy, particularly
for institutions with large equity holdings to hedge their positions and
reduce their market risks, and to take advantage of market moves that they
foresee have a high probability of occurring.

Bad for the economy? They do add another layer of expense to equity-based
securities, and the extra costs of fund management get passed on to
shareholders. Since the performance of the funds is highly automated based
on their underlying indices, actively managed funds automatically suffer a
disadvantage to index funds.