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Index funds and their investment policy - Essay Example
Author : ottis25
Pages 4 (1004 words)
While "index funds" mentioning, the majority of investors imagine the funds, portfolio of which attached to Standard & Poor's 500 index. Of course, this is the first-rate and most popular is Vanguard 500 Index (VFINX) among them. This is the largest mutual investment fund, which is the standard for index funds…
Unlike index funds, actively managed funds aim to reach results, which exceed whole market results or some of its components. It's important for their managers to select the stocks, necessary to buy, correctly, and also to define exactly the best selling/purchasing moment.
Unlike actively managed funds, which aim to reach results, which exceed whole market results or some of its components (it's important for their managers to select the stocks, necessary to buy, correctly, and also to define exactly the best selling/purchasing moment), index funds demonstrate more passive investment strategy.
Index funds invest assets to some basic asset classes, each of them characterized by its own flights and drops. That's why combinations of investing into funds, based on various indexes allow reaching some balance, reducing the risk and increasing invested money return.
There are five five members, who represent Standard & Poor's and the ASX. They set policy, determ index composition and administer the indices in accordance with the S&P/ASX index methodology. The investment policy includes adding, removing or by-passing any company or during the selection process.
And what about the portfolio investment ...