West Loop Financial LLCWhy Index Investing Wins – West Loop Financial LLC https://www.westloopfinancial.com Evolutionize Site Wed, 19 Aug 2020 20:50:49 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.22 Why Index Investing Wins https://www.westloopfinancial.com/2015/12/28/why-index-investing-wins/ https://www.westloopfinancial.com/2015/12/28/why-index-investing-wins/#respond Mon, 28 Dec 2015 09:00:23 +0000 http://evolvemypractice.com/?p=2473 J.B. Heaton, Nick Polson and J.H. Witte recently authored a nice short paper—it’s all of four pages—entitled “Why Indexing Works.” In it, the authors developed a simple stock selection model to explain why active equity fund managers tend to underperform their benchmark index. While most of the academic literature focuses on the efficiency of the...

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]]> J.B. Heaton, Nick Polson and J.H. Witte recently authored a nice short paper—it’s all of four pages—entitled “Why Indexing Works.” In it, the authors developed a simple stock selection model to explain why active equity fund managers tend to underperform their benchmark index.

While most of the academic literature focuses on the efficiency of the market and the higher costs of active management, Heaton, Polson and Witte focus their attention on another aspect of active management’s costs.

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