I’m feeling lazy today, so here’s a cut and paste response that I posted to a question in LYN:
Can someone recommend some unit trust fund managers for KLCI INDEX fund? Is the OSK KLCI Tracker the only KLCI index fund around? I cannot believe this. Why other fund managers don’t setup an index fund? Why let OSK monopoly? I can’t even find two to compare and see which is cheaper.
Late reply, but this is something that I’ve wondered about in the past on this very forum as well. If you read a lot of general investment advice that comes out of experience in the US markets, the general consensus you should get is that most ordinary people should just buy index funds and forget about everything else. The rationale is that research has definitively demonstrated that over the long run, index funds in the aggregate outperform actively managed funds once you account for the higher costs associated with the managed funds. While it is possible for managed funds to beat the index, research has shown that it is not generally possible to predict in advance which particular managed fund will beat its benchmark index in any particular year. Research has also shown that the simple strategy of choosing the best performer of last year to invest in every year is a losing one.