What is NOT a benefit of an Equity Index Fund over an Actively Managed Equity Mutual Fund?

Question

BlackTom AI · Accepted Answer

Question: What is NOT a benefit of an Equity Index Fund over an Actively Managed Equity Mutual Fund?

Option 1: 'Lower Expense Ratios than the typical actively managed fund.' A core advantage of index funds is their typically lower expense ratios due to passive management and simpler replication strategies. This option correctly describes a benefit of index funds, so it is not the NOT-benefit.

Option 2: 'Better Diversification than the typical actively managed fund.' Broad market exposure is a hallmark of index funds, offering wide diversification across the index they track. In many cases, this level of diversification is more consistent and cost-effective than what a single actively managed fund achieves, so this is a true benefit of index funds.

Option 3: 'Beat the S&P 500 more frequently than the typical actively managed fund.' This statement asserts that index funds routinely beat the S&P 500 compared to active funds. In reality, index funds are designed to match the performance of the index (e.g., the S&P 500), not beat it, and while some active funds may outperform in certain periods, index funds do not have the goal or guarantee of beating the index. This makes the claim incorrect as a general benefit of index funds.

Option 4: 'Lower Trading Costs than the typical actively managed fund.' Since index funds trade less frequently and often only to rebalance with the index, they typically incur lower trading costs than actively managed funds, which buy and sell more often in an attempt to outperform. This is a recognized benefit of index funds.

In summary, options 1, 2, and 4 describe common, real advantages of Equity Index Funds over actively managed funds, whereas option 3 describes an outcome that is not inherently true of index funds as a general benefit.

What is NOT a benefit of an Equity Index Fund over an Actively Managed Equity Mutual Fund?单项选择题

类似问题

It would be very difficult and expensive for an individual investor to benefit from holding all 500 stocks of the Standard and Poor's 500 Index.

Most financial economists recommend that individual investors:

Index Funds

Question textFill in the gap with ONE word from the text. Research can help to reduce the amount of Answer 1 Question 6[input] between fauna and humans.

Decide if the following statement is TRUE, FALSE or NOT GIVEN according to the text. Compared to the past, zoos regularly provide education in schools.

Decide if the following statement is TRUE, FALSE or NOT GIVEN according to the text. Research in zoos can assist those animals that are still in the wild.

Decide if the following statement is TRUE, FALSE or NOT GIVEN according to the text. According to Dave Hone, there is a need for zoos because it allows the public to see animals face-to-face.

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单