Interesting article in the WSJ over the weekend:
Investors are pouring money into Vanguard Group, the epitome of the hands-off approach to investing, flocking to funds that track market indexes and aren't run by stock pickers or star managers. ...
The surge is part of a sea change in the fund business in which investors are increasingly opting for products that track the market rather than relying on managers to pick winners. ...
Traditional stock-fund managers—old-fashioned stock pickers—have been the hardest hit in the wave toward passive investment. Through July, passively managed stock funds have seen a net $128.4 billion in investor inflows, compared with $18 billion for traditional stock funds, according to Morningstar.
Even uber-active investor Warren Buffett has seen the light, recently disclosing how he wants his estate invested: "Mr. Buffett, 83 years old and with a net worth of $66 billion, wrote that he advised his trustee to 'put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.).'"
If you want to know why index funds are deservedly beating the crap out of actively managed funds, read this post and then go buy Burton Malkiel's book:
