Except for regulatory purposes, which provides a nice marketing loophole to show backtests for a 40 act vehicle.
If you launch an ETF tracking an index which is anything other than a *very* minor variation on market cap weights, you have an actively managed fund. Didn’t think that needed saying but there you go.
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we’re not tracking the index, we’re making a good-faith effort to weight our etf similarly to common indices while also offering a unique alpha-driven allocation process
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i.e. Penguin JPEGs that look rare.
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I know not your point, but there’s an entire subset of active ETFs where you do cash creates and the manager sources securities. Spread is quite high as the bank can’t be arsed to hedge the portfolio properly. In the US at T+1 it’s a bit silly, but heh, that’s showbiz baby.
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Had this argument with Vanguard a few years ago about their UK equity income fund. They claimed it tracked an index therefore passive. Which is a fine argument, except it was an index that was exclusively created for Vanguard by FTSE.
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If it's not a broad-based, cap-weighted index, then it's pre-cooked active.
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Even the s&p 500 is management but the people aren't ready for that conversation
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if you want passive growth get a savings account, we play for keeps out here
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this is true but you have to be careful because letting this argument get in the hand of boomers is considered VERY harmful
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Isn’t the decision to be anything other than the all world index an active decision? You’re excluding valid market caps otherwise
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Yeah everything is active in some sense, but market cap within an asset class or with a size/country threshold is close enough to passive that I’m willing to let it fly.
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