Question

In: Finance

1.What is the performance record of an S&P500 ETF? What are the long-term performance records of...

1.What is the performance record of an S&P500 ETF? What are the long-term performance records of equity mutual funds relative to benchmarks, linking your answer to the AUM growth of passive investing?

2. Explain the four moments with respect to investing and specifically, to risk-return.  How does this link to normality assumptions?  What information does each contain?

Solutions

Expert Solution

I am answering the first question as per the guidelines of Chegg. It is being requested to post separate questions.

1. Performance of S&P 500 exchange traded fund has been in line with the standard and poor index because exchange traded fund will be almost replicating the rate of return of the index it is associated with, so it is almost replicating the rate of return of standard and poor.

Long-term performance record of the equity mutual fund in respect to benchmark is related to underperformance because a large number of active funds has constantly and continuously underperformed the index rate of return and almost 70% of the active funds over time has underperformed the index rate of return so it can be said that passive investment are better than active investment in the past.

Asset under management growth of passive investment has been larger than active investment because active investment has been providing with a lower rate of return than the passive investment in the past on a large scale.


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