Which one of the following statements is correct?
A) Professional money managers outperformed the Vanguard 500 Index Fund on an annual basis more than half the time for the period 1977-2009.
B) Purchasing and holding a broad-based index fund is a highly recommended means of investing.
C) The number of general equity mutual funds has decreased over the past 20 years due to their underperformance as compared to index funds.
D) The survivorship bias lowers the returns earned by professional money managers as a group.
E) In an efficient market, there is no need for professional money managers.

Question

Quizplus · Accepted Answer

The statement that purchasing and holding a broad-based index fund is a highly recommended means of investing is correct. This is because index funds have been shown to provide higher returns compared to actively managed funds, and they also have lower fees and expenses. The other statements are incorrect. A) Professional money managers have not consistently outperformed the Vanguard 500 Index Fund. B) The number of general equity mutual funds has increased, not decreased, over the past 20 years. D) Survivorship bias can actually inflate the returns of professional money managers. E) In an efficient market, professional money managers are still needed to ensure that prices reflect all available information.

Which One of the Following Statements Is Correct