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Index funds beat active 90% of the time. Really? Investors can gain from both active and passive management, and, contrary to common belief, there is no substantial proof that 90% of active managers don't beat the S&P 500 index, according to a professional investor writing for MarketWatch. In addition, no index has been found that posts a better performance than its active peers under more favorable market conditions, his study found. Clients who are trying to plan what type of management to use should determine a number of things before making any decision, such as their goal for their investment portfolio and their personal performance benchmark. MaketWatch offers a different opinion in the article Index funds superior to high-priced active management. It says that investors are unlikely to benefit from active management as the long-term prospects of a company are difficult to predict given today's fast global economy. Stock picking, which is a primary component of active management, changes so easily that it becomes merely a short-term strategy. While many highly literate investors are confident of their skills and choose active management, retirement investors should heed Warren Buffett's advice to own common stocks through an index fund. -- MarketWatch
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