Index Funds is not same with stock

9 Dec 2010

Some people may guess that index fund is similar to stock. They think that Index fund can give higher return like investing in stock. Index fund invest not only stock but also bond. Bond index that include treasury bond, corporate bond, mortgage-backed bonds, and so on is less popular than stock index. By investing in index, you diversify your money to numerous company.

You should also pay some fee for funds too. The critics of mutual fund is that the manager cannot beat the market. Some manager also cannot beat the market. Perhaps they cannot construct a good portfolio.

The Bond Fund expected return usually is lower than Stock Fund. It is because the expected return of stock is higher than the expected return of bond.


TAGS investment stock share Index Fund bond index stock index expected return fund manager


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