Whenever someone argues for passive investing, very likely he or she will mention that the S&P 500 had beaten most actively managed funds over ten years or longer.
S&P 500 is often the poster child for passive investing, or more specifically, index investing.
Well, because it has performed very well. Possibly the best performing index all time.
Even recently, the S&P 500’s recovery from the COVID health crisis outpaced all the other world indices.
It is truly the role model for indices.
What is an index?
An index represents the stock market, or a segment of the market with a single price, typically calculated from the weighted arithmetic mean of a selection of stocks.
Think of it as a test report score that measures a student’s mastery over an academic subject.
An index is also a market indicator, informing the public about investors sentiments.
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