More Indexes, ETFs and Manager Skill, but Less Alpha

More Indexes, ETFs and Manager Skill, but Less Alpha

How the increase in indexing is leading to the creation of more stock indexes, most of which are used by active managers. How more indexing makes it more difficult for active managers to outperform even though managers are getting more skilled.

Thanks to TripActions and WIX for sponsoring the episode.

For show notes and more information on this episode click here.

  • [0:22] Definition of “alpha.”
  • [0:49] Why there are so many indexes available.
  • [4:35] The business of indexing.
  • [7:01] The criteria that index providers use.
  • [8:04] The cost of change in the index.
  • [10:27] How some companies create ETFs.
  • [12:44] Understanding the complexity of indexes and ETFs.
  • [15:30] The influence of passive management on active management skills.
  • [20:42] Understanding all the underlying facets of an index.


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