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I agree with lance2210 but for different reasons.
Personally I feel you could be better off with a portfolio of actively managed funds.
Index funds are forced to sell perfectly good stocks if the are temporarily out of favour with the market and then buy them back at higher prices when they come back into favour. Doesn't make sense to me.
A lot of Australia's blue chips are undervalued at the moment and the index managers would have had to sell these down even though they are approaching bargain basement levels.
If index funds became too big a part of the market they could end up becoming market makers instead of the market followers that they are meant to be.I think it is doubtful that their investment philosophy would work under these circumstances.Depends on their timeframe I suppose, but as you increase the timeframe you also increase the risk.
I know a lot of people will disagree with me, its just my opinion, but personally I feel a top down,bottom up approach is a lot better.
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