Why index fund perform better?

There are a few reasons why index funds may perform better than actively managed funds over the long term.

Lower costs: Index funds generally have lower fees than actively managed funds because they are not trying to beat the market. They simply aim to track the performance of a particular market index, such as the S&P 500. As a result, they do not need to pay money managers to research and select individual stocks, which can add to the cost of the fund.

Tax efficiency: Index funds are also generally more tax efficient than actively managed funds because they tend to have lower turnover, which means they buy and sell stocks less frequently. This can result in fewer capital gains taxes for investors.

Diversification: Index funds provide investors with broad diversification across a variety of stocks, which can help reduce risk. By investing in a diverse range of stocks, investors can potentially smooth out the ups and downs of the market over time.

Consistency: Because index funds are not trying to beat the market, they do not have to worry about underperforming in certain market environments. This can lead to more consistent performance over time compared to actively managed funds, which may have periods of outperforming or underperforming the market.

It's important to note that past performance is not a guarantee of future results, and there are no guarantees that an index fund will outperform an actively managed fund or the market as a whole. It's always a good idea to carefully consider your investment objectives and risk tolerance before making any investment decisions.