Suppose you have the choice of directly investing in an index fund that provides you with a general exposure to most countries, or a fund with an active manager who strongly over weights certain countries or regions. What are benefits or drawbacks of each? What qualities would you look for in determining the best fit for your portfolio? Why?
Benefits of investing in a fund that provides general exposure to most countries include the following:
1. Low cost of investing. Since this fund is not actively managed, it will have a much lower cost than the fund that is actively managed.
2. There has been a lot of empirical evidence that passively managed funds usually do better than active managed funds. Thus, if the fund is not actively managed it might even perform better ...
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