Index Fundamentalism Revisited
Jared Kizerís analysis indicates the return to stock-picking skills is not enough to offset the additional transactions costs of a managed portfolio. Thus the superior performance of Vanguardís managed portfolio was due entirely to its tendency to overweight small stocks and value stocks relative to the index portfolio during a period when stocks with these two characteristics outperformed the market. So, it is style-picking skill rather than stock picking skill that leads to the superiority of the managed portfolio in this particular instance. Similarly, style-picking skill explains the lower risk for the managed portfolio.
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|Date of creation:||2004|
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