An investment approach that won’t leave you high and dry.
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Why indexing?
An index fund aims to achieve market returns by holding a broad spread of securities to track the overall performance of an index. Index funds combine diversification with low costs, a strategy that has historically outperformed most actively managed funds.
Why has indexing become such a popular investment strategy?
Diversification.
The broad spread of securities in an index means less exposure to the performance fluctuations of individual shares and securities. The overall effect is to moderate volatility and smooth out returns over time.*
Low costs.
Indexing has a cost advantage due to low management fees and low transaction costs.
Tax efficient.
Indexing’s ‘buy and hold’ approach makes the most of capital gains tax concessions.
Reduced risk.
Index funds simplify the investment process by closely tracking market returns instead of relying on someone’s opinion about ‘picking the market’.
What about returns?
Indexing aims to deliver competitive long-term investment returns at low cost. Index funds do not incur the same level of costs associated with research and analysis compared to actively managed funds. And index funds tend to have lower levels of portfolio turnover, which results in lower fees and the potential for favourable capital gains tax outcomes.
Interactive Plain Talk Guides
What's your indexing IQ? Find out this and much more with our interactive guides on seven popular investment topics.
- Understanding indexing
- Managed funds
- Investing for income
- Realistic sharemarket expectations
- Building your investment portfolio
- Superannuation
- Self managed super funds
Investment Tools
