Is John Bogle right that Vanguard’s index and managed funds are comparable and by his example that investors should hold both? Each Vanguard managed fund produces the same return as the tracking basket of Vanguard’s indexed funds plus a differential, a. If a, is positive the managed fund is superior to the tracking index. Managed funds that are closely tracked by their tracking basket are beaten by their baskets. Those that are not, beat them. We also find that during the period considered: a’s in one period predict a’s in the next period, and managers make prescient style choices.
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Paper provided by Duke University, Department of Economics in its series Working Papers with number
07-03.
Length: 22 pages Date of creation: 2007 Date of revision: Handle: RePEc:duk:dukeec:07-03
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