We offer index funds throughout New Zealand in Christchurch (chch), Auckland, Wellington, Dunedin and the Otago and Canterbury regions

What Is An Index Fund?

An index fund or passive fund holds stocks in all of the companies within an overall market, as defined by that index. For example, a passively managed fund may track an index, such as the NZX50 by investing in a portfolio of shares that is intended to replicate the index.

In the simplest sense, an index fund is an investment fund that attempts to replicate the performance of a given index of stocks or some other investment type. That can include bonds or even a narrow subset of a financial market, say, small-cap biotech companies.

Most index funds work by identifying an already well-known index, usually maintained by a respected third party, then building a fund that either owns every asset in the index or achieves the same end by holding similar securities.

An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.

We adhere to an Asset Class Investment Philosophy. Which is a method that uses a wide range of passively managed funds (e.g. index funds) to construct a portfolio that meets your specific needs while maximising your return, based on the volatility you allow in your portfolio. In other words, owning index funds alone or any single good investment is not enough. You must own the right mix of investments for your specific circumstances.

This style is contrary to the traditional “active management approach” employed by brokers and most other financial planners, whereby individual securities and investment managers are selected to outperform the market.

Since the early 1980s, a significant body of academic research has been compiled that consistently shows that approximately 80% of all fund managers deliver below market performance, once the effect of their fees and expenses are taken into account. Furthermore, the top 20% of fund managers vary from year to year. This makes trying to pick next year’s top performers a risky strategy and in our view is likely to lead to below par returns.

An asset class strategy aims to deliver the returns from each asset class with minimal costs. If executed correctly, it ensures investors are appropriately rewarded for the investment risks they take. The benefits of this approach are broad diversification – you will own approximately 8,000 different companies and assets, reduced volatility, lower risk, lower fees, and enhanced returns.

Learn more about Index Funds

  1. Give us a call on: 0800 864 164
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