 Index Funds: The 12-Step Program for Active Investors (Hardcover)by Mark T Hebner
ISBN: 0-9768023-0-9
see more books...
|
Harry M. Markowitz - Portfolio Theory and 2008
|
|
|
Mark T. Hebner - Big Losses, Big Government and Your Investments
|
|
|
Harry Markowitz - Portfolio Theory Vs. Financial Engineering, and Their Roles in Financial Crises
|
|
|
Step 1: Active Investors - Podcast Interview with Mark Hebner
|
|
|
Step 2: Nobel Laureates - Podcast Interview with Mark Hebner
|
|
|
see more investing videos...
Sign Up for IFA's Quote of the Week
|
John Spence
Russell Indexes Gain Market Share
John Spence
Wednesday, July 03, 2002
Russell indexes are becoming more widely accepted by institutional investors, according to a recent study of over 3,6000 U.S. equity products listed in Nelson Information's Marketplace Web database. The 10 most commonly used U.S. equity benchmarks are listed below.
|
Top U.S. equity benchmarks ranked by usage
|
|
Rank
|
Index
|
|
1
|
Standard & Poor's 500
|
|
2
|
Russell 2000
|
|
3
|
Russell 1000 Value
|
|
4
|
Russell 2000 Growth
|
|
5
|
S&P MidCap 400
|
|
6
|
Russell 1000 Growth
|
|
7
|
Russell 2000 Value
|
|
8
|
Russell 2500
|
|
9
|
Russell Midcap
|
|
10
|
Russell Midcap Growth
|
Source: Nelson Information
The index licensing business has become a lucrative industry in recent years as assets in passively managed funds have grown. Russell estimates that assets in funds benchmarked to Russell indexes topped $214 billion in 2001, while Standard & Poor's says some $1 trillion is indexed to the S&P 500 alone.
The top ten index-linked ETFs are also a good indicator of which benchmarks are currently most popular with investors.
|
Rank
|
ETF
|
Symbol
|
Net Assets
|
% of Total ETF Assets
|
|
1
|
S&P 500 SPDR
|
|
$29,701,985,850
|
33.15%
|
|
2
|
Nasdaq-100 Index Tracking Stock
|
|
$19,359,259,500
|
21.60%
|
|
3
|
S&P 400 MidCap SPDR
|
|
$6,716,739,150
|
7.50%
|
|
4
|
iShares MSCI EAFE
|
|
$4,118,580,000
|
4.60%
|
|
5
|
iShares S&P 500
|
|
$3,952,323,000
|
4.41%
|
|
6
|
DJIA DIAMONDS
|
|
$3,349,501,560
|
3.74%
|
|
7
|
iShares Russell 2000
|
|
$3,200,475,000
|
3.57%
|
|
8
|
iShares S&P SmallCap 600
|
|
$1,353,460,000
|
1.51%
|
|
9
|
Vanguard Total Market VIPERs
|
|
$1,240,037,280
|
1.38%
|
|
10
|
iShares Russell 3000
|
|
$1,119,420,000
|
1.25%
|
Source: The American Stock Exchange, data as of 6/28/2002
Many new fish have entered the indexing pond to nibble on growing passive assets. UBS Global Asset Management has licensed the new Morningstar benchmarks, and the New York Stock Exchange recently launched equity indexes that could be the basis for future exchange-traded funds. The Big Board indexes are calculated and maintained by Dow Jones Indexes.
Fund tracker Lipper has also introduced brand new indexes based on actual stocks held by mutual funds from various categories. The move represents a change in thinking about benchmark methodology, with active managers determining market capitalization and style boundaries, rather than objective rules or a committee.
However, advances in index methodology may obscure the established benefits of index funds, notes FundAlarm gadfly Roy Weitz in his brilliant monthly commentary on the fund industry.
"Indexing works as an investment strategy because it forces investors to own low-cost, diversified portfolios that are constructed with logic and long-term consistency," wrote the pragmatic Weitz in his latest round of colorful observations. "It's still far better to own a fund based on a theoretically imperfect index, if the alternative is some haphazard stock or fund portfolio."
New Japan ETF
Nomura Asset Management will launch an ETF tomorrow based on the FTSE Japan index. The fund will trade on the Osaka Securities Exchange, and will be followed by the launch of a FTSE Japan Futures contract on July 15th.
|