TITLE

The Death of Indexing

AUTHOR(S)
Hayden, Vern C.
PUB. DATE
June 2004
SOURCE
Journal of Financial Planning;Jun2004, Vol. 17 Issue 6, p38
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article outlines some arguments against indexing. In the March 15, 2004 issue of Investment News, the headline was The Indexing King Trumps Itself. The second paragraph reads, Over the long haul, investors in actively managed funds run by the Vanguard Group Inc. would have earned higher returns--and take less risk--than those who put their money into the company's famed index funds. That is one conclusion of a study soon to be published in the summer 2004 issue of the Journal of Portfolio Management. Anyone managing money should have read Charles D. Ellis' classic book, Winning the Loser's Game. The point of that book is that stock picking is a losing game and the most useful function of professional investment advice is in selecting an appropriate asset allocation consistent with the needs, circumstances and preferences of different investors--not in trading from one stock to another on the basis of perceived differences in valuation. The American Funds are not the only ones to beat the indexes. Last year, Morningstar gave out two lifetime achievement awards. One was to Ralph Wanger, manager of the Acorn Fund since 1970. He substantially bet his benchmark index over that period of time. The other award was given to Jean Marie Eveillard, of First Eagle Global. He has managed this fund since January 1, 1979.
ACCESSION #
13473224

 

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