Momentum Funds: The One Risk Investors Ignore

Every time an index rebalances, index funds must buy and sell stocks to match the index. But the price at which index funds trade is often different from the price assumed by index providers.

Add to that costs such as Securities Transaction Tax (STT), brokerage fees, and market impact, and the result is a small gap between the index return and the fund’s return.

Over time, these costs add up, which is why index and factor funds usually deliver slightly lower returns than the index they track.

In this video, we explain:
• How index rebalancing works
• Why index funds face hidden trading costs
• How this affects returns in factor and momentum funds
• What investors should understand before investing

Видео Momentum Funds: The One Risk Investors Ignore канала ET Money