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 …
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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There's some intellectual content in making the S&P 500, sure, but you're like two data scientists and six weeks of work from "Give me something which I can licitly market as 'Biggest 500 companies in America, market cap weighted'"
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(And there is *probably* a regulatory arbitrage here where if you were running a mutual fund you'd have to laboriously document what your process was and convince the SEC you did it, but if you sell it as "User let me make discretionary trades so, you know, I did" maybe works?)
End of conversation
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