Trick Question: What Performs Better Than Index Funds?
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Few teachers upset their students on purpose. But I do it every semester.
“Broad index funds comprise every stock in a given market,” I explain to my high-school personal finance class. “Nobody trades them. Actively managed funds, on the other hand, have managers at the helm, sniffing out the very best stocks.”
Students guess actively managed funds are better. I agree. Then I assign a task: “Find peer-reviewed academic evidence.”
I teach at a private international school in Singapore. The popular kids aren’t Paris Hilton wannabes – they’re future Harvard, Yale and Stanford alumni. Most are ferocious researchers.
But after 40 minutes of scrolling through academic financial papers, even the brainiest kids grumble: “We can’t find evidence; everything says the opposite.” “Keep looking,” I respond.
Read the rest of the article at the Globe and Mail