This can incur taxes of almost 40 percent for taxable money. When taxes are factored in, the return of a high turnover fund can be considerably less than an index fund. This logic has lead to the popularity of index funds. These funds have low turnover and low fees, which also enhances their return relative to many actively managed funds. In good times and bad, an index fund buys the market.
Consistency is an important factor to long term investment success.
Value investing has been one method that, during the 1970s and 1980s delivered superior returns. In theory these stocks will rise over time as the market recognizes the value of the company. Graham is credited with being a pioneer in the area of portfolio analysis and was one of the first people to examine historical and current corporate data in an empirical way. Value investing will always be an important tool in portfolio creation. Information flows faster.