Do enhanced index funds live up to their name?
DOI:
https://doi.org/10.61190/fsr.v19i2.4970Keywords:
Risk-adjusted return, Portfolio performance, Index funds, Enhanced index fundsAbstract
Uninformed investors would expect enhanced index funds (EIFs) to live up to their name and enhance portfolio performance. This updated and thorough comparison of EIFs and pure index funds finds that EIFs, as a whole and in domestic stock fund categories, appear to have performed worse than their pure index funds counterpart with lower returns, higher risks and lower risk-adjusted returns. EIFs behaved more like actively managed funds, with higher expense ratios and turnover rates. Investors should be wary of sales pitches hyping the value of EIFs!
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