Index funds aim to mirror the performance of a market index rather than actively selecting individual stocks.
This reduces the need for constant buying and selling, minimizing transaction costs and capital gains taxes.
Index funds aim to replicate the performance of a specific market index. They don't require the same level of research and analysis as actively managed funds, leading to lower costs.
Fund managers find it challenging to identify mispriced securities and consistently generate excess returns.
Index funds provide broad market exposure by holding a diversified portfolio of securities within a specific index.