Investment in index fund

Given the assumptions on the EMH, no investor is able to generate an abnormal return in the market. An investor should thus focus on the minimizing his costs to invest.

To achieve a market rate of return, diversification in a numerous amounts of stocks is required, which may not be an option for a smaller investor. As such, an index fund would be the most appropriate investment vehicle, allowing the investor to achieve the market rate of return in a cost effective manner.