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Passive Investment Strategies and Efficient Markets

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  • Burton G. Malkiel

Abstract

This paper presents the case for and the evidence in favour of passive investment strategies and examines the major criticisms of the technique. I conclude that the evidence strongly supports passive investment management in all markets—small–capitalisation stocks as well as large–capitalisation equities, US markets as well as international markets, and bonds as well as stocks. Recent attacks on the efficient market hypothesis do not weaken the case for indexing.

Suggested Citation

  • Burton G. Malkiel, 2003. "Passive Investment Strategies and Efficient Markets," European Financial Management, European Financial Management Association, vol. 9(1), pages 1-10, March.
    • Handle: RePEc:bla:eufman:v:9:y:2003:i:1:p:1-10
    DOI: 10.1111/1468-036X.00205
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    References listed on IDEAS

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    1. Fama, Eugene F., 1998. "Market efficiency, long-term returns, and behavioral finance," Journal of Financial Economics, Elsevier, vol. 49(3), pages 283-306, September.
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