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Pension funds trail individuals in embracing index funds

Bigger institutions rely on managers who charge higher fees but promise better returns through alternative investments.

GROWING NUMBERS: The embrace of index funds can be seen in the mutual fund market, whose US$14 trillion in assets is held largely by individuals. The percentage invested in passive index-matching strategies has doubled since 2004 to 30 per cent.

MORE individuals are pouring money into so-called passive investing or index funds, which aim to match the performance of the main stock and bond markets, but larger institutions such as pension funds and endowments have been slower to follow suit, despite the potential for higher returns and