Index funds and ETFs proved most naysayers wrong and finally took off post-COVID. Now, we are dealing with a problem of plenty.
The number of indices and index funds have skyrocketed with the vast majority of AUM concentrated in large-cap market-weighted indices.
As everything in investing, it is always better to wait for things to settle down before committing capital. Index post-launch returns tend to disappoint.
And these numbers are worse for index funds.
While investors win by having low-cost access to a wide range of strategies and sectors, they can still lose by rushing in to “hot” launches. Patience pays.
Charts and code on github.