A passive investment strategy seeks to track the performance of an index by mimicking its holdings. Primarily because of their low-cost structure, well-managed index investments such as an index-based mutual fund or ETFs have generally outperformed higher-cost investments over the long term. When advisers index a solid portion of their clients’ portfolios, their clients often benefit from lower costs, broader diversification and minimal cash drag. These elements can translate to a long-term performance edge.

Zero-sum game
Indexing cost advantage
Difficulty of active management
Other indexing benefits
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