MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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|
MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Wednesday, September 30, 2015 Indexed Isn't Always Passive. Wait, What? Passive, it turns out, doesn't mean the same thing as indexed, so stop using the words interchangeably!
Rekenthaler settles on a difficult active versus passive terminology, as envisioned by Morningstar's Tom Idzorek, who in turn drew the ideas from Morningstar's Don Phillips. They would divide funds into four groups, according to how they weight and implement their investments. Truly passive funds use market capitalization weighting and passive implementation (i.e. investing in everything). Strategic beta funds use their own active, rules-based weighting systems but a passive implementation (i.e. investing in everything that fits the rules). Traditional active funds follow the traditional market weighting ideas to fit into their style boxes but then actively implement by picking their own stocks and bonds within their box. And "alternative active" funds both follow their own, active weighting and implement it their own way. Active versus passive isn't a dichotomy; it's a spectrum. Printed from: MFWire.com/story.asp?s=52693 Copyright 2015, InvestmentWires, Inc. All Rights Reserved |
