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to be used for any questions related to Index funds. The question should clearly state the Index in question [Nasdaq,LSE] or the fund house in question. If the question is generic with the intention to understand how the funds work, then a specific example should be quoted to get a better answer.
2
votes
In what way do index funds "free-ride on the work done by active investors"?
I think your interpretation is pretty close to what the author probably had in mind. The general idea is that capital markets need some form of price discovery to function, and typically that price di …
5
votes
Accepted
How can passive index funds be sustainable at large scale? Won't they affect the indexes the...
The thing you have to understand is that the price of securities is determined not by who owns the securities, but by who trades them. Securities held in passive funds, by definition, don't trade ver …
1
vote
Does the increasing popularity of index fund investing mean that it will become unprofitable...
Index funds aren't trying to outperform the market; thus they have no edge to lose.
I believe the source of your confusion is that you are confusing the excess returns that active trading strategies s …
1
vote
Are inflation protected bond funds a hedge against rate hikes?
Inflation protected securities (IPS) protect against inflation, not against interest rate increases. Since rising inflation is often accompanied by interest rate increases, IPS can mitigate the losse …