Module 1 - The case for low-cost index-fund investing

Learning objectives

  • Explore index investing and its rising popularity. 
  • Understand the benefits of the approach - such as lower costs, and more diversification and transparency and the way index investing differs to active management. 
  • Explore the theoretical underpinnings of index investing’s success, such as the zero-sum game theory and the impact of costs on net returns.
  • Understand the rarity of persistent outperformance among active managers, and the importance of long-term timeframes for evaluating investment strategies.
  • Analyse the impact of costs on the performance of active management versus index investing.

Learning outcomes

  • Understand index investing and its popularity due to lower costs, diversification benefits and transparency. 
  • Familiarity with the zero-sum game theory and its implications for active management.
  • Understand the influence of costs on investment performance and how low-cost index funds offer market exposure at minimal expenses.
  • Understand how index investing differs from active management.
  • Unit 1: The case for low-cost index-fund investing

    Reading time: 15 minutes

    This article reviews the conceptual and theoretical underpinnings of index investing’s ascendancy and discusses why we expect it to continue its success and popularity.
     

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  • Video 1: An introduction to index-fund investing

    Watching time: 4 minutes

    Find out what index investing is and what makes it popular with investors.
     

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  • Video 2: Exploring the benefits of index-fund investing

    Watching time: 3 minutes

    Learn about how low-cost index investing can help investors achieve their financial goals.
     

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  • Module 1 quiz

    Take the Module 1 quiz for 30 minutes of CPD.
     

    quizTake the quiz

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