Today’s Chart of the Day comes from S&P Dow Jones Indices and shows the cumulative savings from using index funds vs. actively managed funds, as well as the growth of indexed funds since 1996.
Index funds have reached a staggering $7 trillion in total assets. Since active funds costs more vs. indexed funds, investors have saved an equally impressive $400 billon in fees, which is more than the entire market value of Wal-Mart.
The reason for growth in index funds? Since S&P started keeping score 20 years ago, only a paltry 6% of active funds have outperformed them.
As you can see in the chart, more and more are starting to say, “Why pay more and earn less?” and moving their investments accordingly.