--- title: "Meaning & Key Takeaway of: Experience conclusively shows that…" description: "\"Experience conclusively shows that index-fund buyers are likely to obtain results exceeding those of the typical fund manager, whose large advisory fee..." image: "https://sms4smile.com/quotes/i/bd2/burton-malkiel-31547_advisory_experience-conclusively-shows-that-index_1660094.png" --- # Experience conclusively shows that index-fund buyers are… ![“Experience conclusively shows that index-fund buyers are likely to obtain results exceeding those of the typical fund manager, whose large advisory fees and substantial portfolio turnover tend to reduce investment yields. Many people will find the guarantee of playing the stock-market game at par…” quote by Burton Malkiel](https://sms4smile.com/quotes/i/bd2/burton-malkiel-31547_advisory_experience-conclusively-shows-that-index_1660094.png) [Download](https://sms4smile.com/quotes/i/bd2/burton-malkiel-31547_advisory_experience-conclusively-shows-that-index_1660094.png) [Open image](https://sms4smile.com/quotes/i/bd2/burton-malkiel-31547_advisory_experience-conclusively-shows-that-index_1660094.png) > “Experience conclusively shows that index-fund buyers are likely to obtain results exceeding those of the typical fund manager, whose large advisory fees and substantial portfolio turnover tend to reduce investment yields. Many people will find the guarantee of playing the stock-market game at par every round a very attractive one. The index fund is a sensible, serviceable method for obtaining the market's rate of return with absolutely no effort and minimal expense.” [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Index funds often outperform active managers due to lower fees and turnover. **In simple terms:** Low‑cost index funds beat most active managers. Key Takeaway Prefer low‑cost diversified investing. Themes finance investment efficiency behavioral economics risk management Mood analytical pragmatic educational Type financial advisory When to use this quote - retirement planning - college savings - portfolio diversification - long‑term wealth building Key Concepts passive investing market efficiency fee structures Questions to Reflect On - Is passive investing always the best choice? - How do fees impact long‑term returns? A Different Perspective Active strategies may succeed in niche markets or volatile periods. ★ ★ ★ ★ ★ No ratings yet [Advisory](https://sms4smile.com/quotes/about/advisory/) [Buyers](https://sms4smile.com/quotes/about/buyers/) [Customer](https://sms4smile.com/quotes/about/customer/) [Effort](https://sms4smile.com/quotes/about/effort/) [Games](https://sms4smile.com/quotes/about/games/) [Index funds](https://sms4smile.com/quotes/about/index-funds/) [Investing](https://sms4smile.com/quotes/about/investing/) [Investment](https://sms4smile.com/quotes/about/investment/) [Management](https://sms4smile.com/quotes/about/management/) [People](https://sms4smile.com/quotes/about/people/) [Portfolios](https://sms4smile.com/quotes/about/portfolios/) [Rounds](https://sms4smile.com/quotes/about/rounds/) [Sensible](https://sms4smile.com/quotes/about/sensible/) ## Related quotes > [The typical fund company services 401k plan participants in the same way that Baby Face Nelson serviced banks.](https://sms4smile.com/quotes/william-j-bernstein/the-typical-fund-company-services-401k-plan-participants-in-the-same/) [William J. Bernstein](https://sms4smile.com/quotes/author/william-j-bernstein/) > [The number-one job of the hedge-fund manager is not to make sure that you can retire with a smile on your face - it's…](https://sms4smile.com/quotes/mark-cuban/the-number-one-job-of-the-hedge-fund-manager-is-not-to-make-sure-that/) [Mark Cuban](https://sms4smile.com/quotes/author/mark-cuban/) > [“For though there was no chance of persuading a pension fund manager looking to make a longer-term loan to buy a Freddie Mac bond…](https://sms4smile.com/quotes/michael-lewis/for-though-there-was-no-chance-of-persuading-a-pension-fund-manager/) [Michael Lewis](https://sms4smile.com/quotes/author/michael-lewis/) > [Mutual fund manager performance does not persist and the return of stock picking is zero.](https://sms4smile.com/quotes/william-j-bernstein/mutual-fund-manager-performance-does-not-persist-and-the-return-of/) [William J. Bernstein](https://sms4smile.com/quotes/author/william-j-bernstein/) > [There are a lot of parallels between being a mutual fund manager and being a general manager. Both in the financial markets and in…](https://sms4smile.com/quotes/paul-depodesta/there-are-a-lot-of-parallels-between-being-a-mutual-fund-manager-and/) [Paul DePodesta](https://sms4smile.com/quotes/author/paul-depodesta/) > [A hedge fund manager whose clients demand monthly performance reports has different needs than any individual investors with a 20-year time horizon. The needs…](https://sms4smile.com/quotes/barry-ritholtz/a-hedge-fund-manager-whose-clients-demand-monthly-performance-reports/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [... Any pension fund manager who doesn't have the vast majority-and I mean 70% or 80% of his or her portfolio-in passive investments is…](https://sms4smile.com/quotes/merton-miller/any-pension-fund-manager-who-doesn-t-have-the-vast-majority-and-i/) [Merton Miller](https://sms4smile.com/quotes/author/merton-miller/) > [Try to pick a fund manager who has a well-defined strategy, has been through these things before, and go invest and stay with him.](https://sms4smile.com/quotes/peter-cundill/try-to-pick-a-fund-manager-who-has-a-well-defined-strategy-has-been/) [Peter Cundill](https://sms4smile.com/quotes/author/peter-cundill/) > [The average hedge fund manager is going to earn zero per cent in extra return.](https://sms4smile.com/quotes/john-c-bogle/the-average-hedge-fund-manager-is-going-to-earn-zero-per-cent-in/) [John C. Bogle](https://sms4smile.com/quotes/author/john-c-bogle/) > [“A small stock trader is like a small hedge fund manager, zen monk, psychologist, intelligence officer, sniper, sportsman, poker player, risk manager, analyst, and…](https://sms4smile.com/quotes/mika/a-small-stock-trader-is-like-a-small-hedge-fund-manager-zen-monk/) [Mika](https://sms4smile.com/quotes/author/mika/) > [After a lifetime of picking stocks, I have to admit that Bogle's arguments in favor of the index fund have me thinking of joining…](https://sms4smile.com/quotes/jim-cramer/after-a-lifetime-of-picking-stocks-i-have-to-admit-that-bogle-s/) [Jim Cramer](https://sms4smile.com/quotes/author/jim-cramer/) > [A low-cost index fund is the most sensible equity investment for the great majority of investors. My mentor, Ben Graham, took this position many…](https://sms4smile.com/quotes/warren-buffett/a-low-cost-index-fund-is-the-most-sensible-equity-investment-for-the/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [By periodically investing in an index fund, the know-nothing investors can actually outperform most investment professionals.](https://sms4smile.com/quotes/warren-buffett/by-periodically-investing-in-an-index-fund-the-know-nothing-investors/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The key aspect of an index fund is that many of them, not all of them, but many of them are extremely cheap.](https://sms4smile.com/quotes/william-j-bernstein/the-key-aspect-of-an-index-fund-is-that-many-of-them-not-all-of-them/) [William J. Bernstein](https://sms4smile.com/quotes/author/william-j-bernstein/) > [Most investors, both institutional and individual, will find that the best way to own common stocks (shares') is through an index fund that charges…](https://sms4smile.com/quotes/warren-buffett/most-investors-both-institutional-and-individual-will-find-that-the/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) ## More by Burton Malkiel > [Never buy anything from someone who is out of breath.](https://sms4smile.com/quotes/burton-malkiel/never-buy-anything-from-someone-who-is-out-of-breath/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected…](https://sms4smile.com/quotes/burton-malkiel/a-blindfolded-monkey-throwing-darts-at-a-newspaper-s-financial-pages/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [J.P. Morgan once had a friend who was so worried about his stock holdings that he could not sleep at night. The friend asked,…](https://sms4smile.com/quotes/burton-malkiel/j-p-morgan-once-had-a-friend-who-was-so-worried-about-his-stock/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [Trust in time rather than timing,](https://sms4smile.com/quotes/burton-malkiel/trust-in-time-rather-than-timing/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [Index funds have regularly produced rates of return exceeding those of active managers by close to 2 percentage points. Active management as a whole…](https://sms4smile.com/quotes/burton-malkiel/index-funds-have-regularly-produced-rates-of-return-exceeding-those/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [Index funds are... tax friendly, allowing investors to defer the realization of capital gains or avoid them completely if the shares are later bequeathed.…](https://sms4smile.com/quotes/burton-malkiel/index-funds-are-tax-friendly-allowing-investors-to-defer-the/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [It's not that stock prices are capricious. It's that the news is capricious.](https://sms4smile.com/quotes/burton-malkiel/it-s-not-that-stock-prices-are-capricious-it-s-that-the-news-is/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [Many of us economists who believe in efficiency do so because we view markets as amazingly successful devices for reflecting new information rapidly and,…](https://sms4smile.com/quotes/burton-malkiel/many-of-us-economists-who-believe-in-efficiency-do-so-because-we-view/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [Stupidity well packaged can sound like wisdom.](https://sms4smile.com/quotes/burton-malkiel/stupidity-well-packaged-can-sound-like-wisdom/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [Historically, the stock market is like a gambling casino with the odds in your favor. Over the long pull, stocks are given something like…](https://sms4smile.com/quotes/burton-malkiel/historically-the-stock-market-is-like-a-gambling-casino-with-the-odds/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [It's like giving up a belief in Santa Claus.](https://sms4smile.com/quotes/burton-malkiel/it-s-like-giving-up-a-belief-in-santa-claus/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [The surest way to find an actively managed fund that will have top-quartile returns is to look for a fund that has bottom-quartile expenses.](https://sms4smile.com/quotes/burton-malkiel/the-surest-way-to-find-an-actively-managed-fund-that-will-have-top/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [We conclude that hedge funds are far riskier and provide much lower returns than commonly supposed.](https://sms4smile.com/quotes/burton-malkiel/we-conclude-that-hedge-funds-are-far-riskier-and-provide-much-lower/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [I have become increasingly convinced that the past records of mutual fund managers are essentially worthless in predicting future success. The few examples of…](https://sms4smile.com/quotes/burton-malkiel/i-have-become-increasingly-convinced-that-the-past-records-of-mutual/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [Index funds do not trade from security to security and, thus, they tend to avoid capital gains taxes.](https://sms4smile.com/quotes/burton-malkiel/index-funds-do-not-trade-from-security-to-security-and-thus-they-tend/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) [Explore all 16 Burton Malkiel quotes ](https://sms4smile.com/quotes/author/burton-malkiel/) ## More Advisory quotes > [Once scouting fully opens its doors to all who desire the same experience that so fully enriched me as a young person, I will…](https://sms4smile.com/quotes/steven-spielberg/once-scouting-fully-opens-its-doors-to-all-who-desire-the-same/) [Steven Spielberg](https://sms4smile.com/quotes/author/steven-spielberg/) > [We had a very good number of mayors participate this year. 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Members should be chosen for the broadest possible representation of the public interest, their…](https://sms4smile.com/quotes/wright-patman/also-the-federal-advisory-committee-should-be-enlarged-and/) [Wright Patman](https://sms4smile.com/quotes/author/wright-patman/) > [Because judges may not issue advisory opinions, judicial nominees may not do so either, especially on issues likely to come before the court. That…](https://sms4smile.com/quotes/orrin-hatch/because-judges-may-not-issue-advisory-opinions-judicial-nominees-may/) [Orrin Hatch](https://sms4smile.com/quotes/author/orrin-hatch/) > [In high school, I was on the youth advisory council for the Mayor's Office of Los Angeles, and that was kind of my first…](https://sms4smile.com/quotes/rashida-jones/in-high-school-i-was-on-the-youth-advisory-council-for-the-mayor-s/) [Rashida Jones](https://sms4smile.com/quotes/author/rashida-jones/) > [My group, the Lawyers Committee on Nuclear Policy, was one of the principle organizers. So, there was this campaign to support the United Nations…](https://sms4smile.com/quotes/john-burroughs/my-group-the-lawyers-committee-on-nuclear-policy-was-one-of-the/) [John Burroughs](https://sms4smile.com/quotes/author/john-burroughs/) > [And this - this board was - was impanelled in 1951. And it's gone through ups and downs in how the secretaries have used…](https://sms4smile.com/quotes/chuck-hagel/and-this-this-board-was-was-impanelled-in-1951-and-it-s-gone-through/) [Chuck Hagel](https://sms4smile.com/quotes/author/chuck-hagel/) > [That text-books be permitted in Catholic schools such as will not offend the religious views of the minority, and which from an educational standpoint…](https://sms4smile.com/quotes/charles-tupper/that-text-books-be-permitted-in-catholic-schools-such-as-will-not/) [Charles Tupper](https://sms4smile.com/quotes/author/charles-tupper/) > [If small groups are included in the decision-making process, then they should be allowed to make decisions. 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