When investing passively, do so actively. But they aren't right for all investors. By understanding the investment-management process of index funds CPAs will be better able to advise their clients or employers.
Stock turnover is low, so expenses are also low, giving index funds a head start in performance.
Low securities turnover also results in better timing of realized gains. Because stock selection is not based on fundamentals, the fund usually pays homage to past performance not future potential. Active managers serve their clients best by employing a sell discipline that locks in gains and redeploys assets to more attractive investment opportunities. CPAs should be careful when recommending index funds. The best way to fulfill an investment goal is through thoughtful and deliberate investment choices.