It's been nearly 35 years since the precursor to The Vanguard Group, now the
country's largest mutual fund company, offered the first index-style mutual
fund to individual investors. Through mutual funds and exchange-traded funds,
indexing now accounts for about $1.6 trillion in investor assets, and indexing
has legions of diehard believers.
A parade of studies has shown why: Index funds, which try to simply match
the performance of a broad market sector, have consistently beaten "actively
managed" funds, where professional money managers attempt to outperform
the market by picking the hottest stocks and bonds.