Active returns are near zero, but negative on average.
This is also referred to as your Investment Policy, and as Charles Ellis points out in his 1985 classic, Investment Policy, it is the most important choice an investor can make. In this Step, we will review various mixtures of risk exposures and show the long term historical returns of those portfolios. Now that you have established a Risk Capacity, you need to evaluate risk, before taking it. Numerous studies, including one by the worldwide accounting firm PriceWaterhouseCoopers , conclude that Index Funds will best achieve an investors goals, making them a perfect way to implement your Risk Exposure. This concept is even incorporated into legal guidelines, under the Prudent Investor Rule.