The Arithmetic of Active Management
One can’t be a “passive investor” if there’s no “passive index” one can buy! So who cares if you’re underperforming some theoretical and uninvestable index as long as you’re getting what you expect? If I can buy the broad market for .03%, then fine, I will buy a fund that does that instead of trying to duplicate the strategy myself at much higher costs. But what if there’s no index and fund available for the strategy you want to utilize?
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