Re:The Impact of Index Investing: A Follow-Up
by dragonwriter on Wednesday May 04, 2016 @01:38PM
(#11630047)
> Now, this doesn't take into account getting away with insider trading, of course.
More importantly, it also doesn't take into account that there are investment opportunities that are not as directly (i.e., without intermediary layers which extract some of the returns) available to passive investors, so that the passive/act groups aren't splitting the same universe of alternatives. (E.g., passively investing in any given index fund is on average better than actively investing restricted to stocks in that index, and you can probably even extend that to passively investing in index funds in generally being better than actively investing in investments that directly held by any combination of index funds, but not every investment vehicle in the market is directly held by index funds.)
More importantly, it also doesn't take into account that there are investment opportunities that are not as directly (i.e., without intermediary layers which extract some of the returns) available to passive investors, so that the passive/act groups aren't splitting the same universe of alternatives. (E.g., passively investing in any given index fund is on average better than actively investing restricted to stocks in that index, and you can probably even extend that to passively investing in index funds in generally being better than actively investing in investments that directly held by any combination of index funds, but not every investment vehicle in the market is directly held by index funds.)