Warren Buffett digs index investing

By Scoop
May 3, 2022 · less than 3 min read

Indexes are outperforming money managers – and Warren Buffett is loving it. 

Ticker tape 

The wrap on stock markets since the outbreak of the pandemic is one of volatility. From the initial crashes to the months of stagnation and rate rises, it’s not been the greatest time for many money managers and stock pickers. When it comes to indexes though, it’s a different story.  

While it’s true that the S&P 500 index fund has not had the best week, Warren Buffett is a long-standing fan of it. And, according to a recent report by S&P analysts, he’s right to be all in on it. As many as 85% of large cap equity fund managers underperformed the S&P 500 – making it the 12th year in a row that fund managers haven’t been able to get close to its success.  

Getting your fair share 

Buffett’s investing reputation means it’s no surprise to see his wily mind turning to indexes. Stock picking could help you win big if a firm does well, but if things start going the other way, you’ve shouldered all that risk.  

Indexing gets you a fair share of a rising market. And if the market starts to contract, you’ll still likely be some way from the worst-case scenario. Considering how strongly index funds like these have been performing in the last couple of years, they can also win you a fair share too. 

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