Active Index Investing: Maximizing Portfolio Performance and by Steven A. Schoenfeld

By Steven A. Schoenfeld

For over 3 many years, indexing has turn into more and more accredited by way of either institutional and person investors.  Index benchmarks and funding items that music them were a motive force within the transformation of funding approach from paintings to technological know-how. but traders’ knowing of the sophistication of this burgeoning box has lagged the growing to be use of index products.

Active Index Investing is the definitive consultant to how indexes are developed, how index-based portfolios are controlled, and the way the world’s such a lot subtle traders use index-based recommendations to reinforce functionality, decrease charges and reduce the dangers of investing.

Active Index Investing presents a entire review of (1) the funding theories which are the basis of index established making an investment, (2) top practices in benchmark building, (3) the becoming international of index-based funding autos, (4) state-of-the-art index portfolio administration techniq ues and (5) the myriad methods traders can and do trap some great benefits of indexing.

Active Index Investing has a different layout that captures the perspectives and views of over forty of the funding industry’s best specialists and practitioners, whereas protecting a holistic view of this advanced subject material. as well as the Appendix and thesaurus in the publication, it gains an E-ppendix, to be had at

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This phenomenon developed through the interaction and debate of many players: academics (discussed in Part One), index providers, consultants, fund managers, and asset owners. Index benchmarks have numerous differences—investors need to understand the methodologies before making decisions. And as ETFs penetrate further into the retail marketplace, this need will become more pressing. Choosing benchmarks and investment strategies will become increasingly complex. Parts Two and Three of the book describe many nuances involved with these choices and explore ways to build portfolios on them.

Part One provides a solid foundation in the history, rationale, and dynamism of indexing. It will hopefully propel the reader—with enthusiasm— into the more technical parts of the book. By the time you reach the final chapter, you are likely to be as excited as I am about the next stage of the indexing revolution. qxd 6/14/04 8:45 AM Page 13 CHAPTER 2 The Foundations of Indexing Theoretical and Practical Underpinnings of a Heretical Concept Binu George, Steven A. Schoenfeld, and Jim Wiandt Editor’s Note This chapter chronicles the evolution of the investment theories that explain why index investing is the most rational method of fund management.

The indexing business was the beneficiary of this underperformance, growing steadily from a humble $6 million in 1971 to reach $10 billion by 1980. , deregulation of commissions and regulators’ acceptance of indexing as a prudent investment approach) aided this phenomenal growth. Stock commissions were deregulated on May 1, 1975. 8 The regulatory change that cleared the way for indexing was a statement that “prudence” in mutual funds would be determined on the basis of diversification, as opposed to an examination of the merits of individual stocks.

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