"Enhanced" Index Funds: Can They Beat the Market?
by John C. Bogle
Since the inception of the first index mutual fund in 1975, indexinginvesting in passively managed, broadly diversified, low-cost, stock and bond index fundshas proved to be both a remarkable artistic success and a remarkable commercial success.
In terms of artistic success, index funds have been able to provide returns to investors that have vastly surpassed the returns achieved by investors in actively managed mutual funds.
Given that artistic success, the commercial success of indexing is hardly surprising. Today, most indexed assets are concentrated in classic index funds representing the broad U.S. stock market (the S&P 500 or the Dow Jones Wilshire 5000), the broad international stock market (the Morgan Stanley EAFE [Europe, Australia, and Far East] Index), and the broad U.S. bond market.
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