Great post. A passive investor in the Russell 2000 has ~40% annual turnover. I wonder if anyone will create passive vehicles that invest in a basket of stocks that 1) correlates with an index, but 2) targets stocks that won’t require much turnover.https://twitter.com/alphaarchitect/status/1134108534260584448 …
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Explanation for peanut gallery: An index is just an algorithm which determines names and weightings of securities. The "branded" ones are owned by e.g. S&P, Dow Jones, etc etc. This is extraordinarily valuable IP because funds which use them pay licensing fees based on AUM.
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The reason fund advisers are cool with that is because they think they get a marketing edge by selling S&P 500 Double Weight Tech Index Tracking but if the marketing edge is e.g. "We let you tweet that you're taking revenge on your bank" (or whatever), that is basically free.
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