Indexing vs. Upgrading

Q: I've seen several articles lately on why it's better to stick with index funds than to use actively-managed funds. What do you think?

A: Research shows that, as a group, indexers tend to outperform active investors. Why? Because most investors who use actively-managed funds have no long-term strategy or benchmarks for making decisions, so they make choices based on whims and emotion. Indexing (we call it our Just-the-Basics strategy) solves these problems.

Still, Upgrading — our actively-managed strategy — has outperformed indexing in nine out of the past 10 years. Upgrading offers a decision-making framework and selling discipline that helps investors execute this mechanical (i.e., unemotional) investing strategy.