Active Index Investing: Maximizing Portfolio Performance and Minimizing Risk Through Global Index Strategies / Edition 1

Active Index Investing: Maximizing Portfolio Performance and Minimizing Risk Through Global Index Strategies / Edition 1

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by Steven A. Schoenfeld
     
 

For over three decades, both institutional and individual investors have increasingly accepted indexing. Index benchmarks and investment products that track them have been a driving force in the transformation of investment strategy from art to science. Yet investors’ understanding of the sophistication of this burgeoning field has lagged behind the growing

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Overview

For over three decades, both institutional and individual investors have increasingly accepted indexing. Index benchmarks and investment products that track them have been a driving force in the transformation of investment strategy from art to science. Yet investors’ understanding of the sophistication of this burgeoning field has lagged behind the growing use of index products. Active Index Investing aims to close that gap.
Active Index Investing is the definitive guide to how indexes are constructed, managed as portfolios, and used by investors. Filled with in-depth insight and practical advice, this book illustrates and analyzes every major asset class and covers the perspectives of index fund managers, index providers, institutional brokers, pension plan sponsors and other asset owners, financial advisors, and individual investors. It skillfully explains how the world’s most sophisticated investors use index-based strategies to enhance performance, reduce costs, and minimize the risks of global investing.
This comprehensive guide captures the views of over fifty leading practitioners from all spheres of the indexing world–while maintaining a holistic and balanced perspective of this complex subject. Besides pulling together the best minds in the investment business, editor and indexing expert Steven Schoenfeld also shares his considerable insights on this broad and important topic.
Active Index Investing is actually five books in one, with thirty-one chapters providing a comprehensive exploration of:

  • The theories and practical experience that are the foundations for indexing
  • The uses of indexes and best practices in benchmark construction
  • The ever-expanding range of index-based investment products and vehicles
  • Index portfolio management techniques for equity and fixed-income funds
  • Choosing between various index products and the ways in which sophisticated investors harness the overall benefits of indexing

Fittingly, for a subject so broad, the book’s scope doesn’t end with these topics, but continues in the book’s "E-ppendix"–www.ActiveIndexInvesting.com, partnered with the IndexUniverse.com Web site–which expands and updates the information and data provided in the book, facilitating even more perspectives to chronicle the ongoing development of this fascinating and dynamic field.

Active Index Investing is a practical and detailed guide to the art and science of index-based investing. It will show you how index-based strategies can be actively used to both minimize portfolio risk and maximize long-term performance.

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Product Details

ISBN-13:
9780471257073
Publisher:
Wiley
Publication date:
07/23/2004
Series:
Wiley Finance Series, #138
Pages:
720
Product dimensions:
6.28(w) x 9.35(h) x 2.22(d)

Table of Contents

FOREWORD: THE ROLE OF INDEXING AND BENCHMARKS IN DEVELOPING SOUND INVESTMENT APPROACHES xi
Don Phillips

PREFACE xv

ACKNOWLEDGMENTS xxi

CONTRIBUTORS xxvii

ABOUT THE EDITOR xxxi

CHAPTER 1 Indexing Is Active: The Meaning of Active Indexing and the Interconnected Themes of the Book 1
Steven A. Schoenfeld

PART ONE The Indexing Revolution: Theory and Practice 11
Steven A. Schoenfeld

CHAPTER 2 The Foundations of Indexing: Theoretical and Practical Underpinnings of a Heretical Concept 13
Binu George, Steven A. Schoenfeld, and Jim Wiandt

CHAPTER 3 The Ever-Evolving Uses of Indexing: Why the Active versus Index Debate Is Over 31
Matthew Scanlan, Binu George, Francis Enderle, and Steven A. Schoenfeld

CHAPTER 4 Market Uncertainty and the Role of Indexing 49
Adele Kohler

PART TWO Benchmarks: The Foundation for Indexing 59
Steven A. Schoenfeld

CHAPTER 5 The Vital Importance and Fundamental Uses of Benchmarks 63
Pamela Cloyd, Larry Siegel, and Steven A. Schoenfeld

CHAPTER 6 Perfection Impossible: Best Practices for Index Construction 81
Steven A. Schoenfeld

CHAPTER 7 The Ideal Index Construction 101
Gus Sauter

CHAPTER 8 U.S. Equity Benchmarks—Broad-Cap, Size, and Style Indexes: Slicing and Dicing the U.S. Equity Market 119
Gardner Platt, Brad Pope, and Chad Rakvin

CHAPTER 9 International/Global Equity Benchmarks for North American Investors 139
Steven A. Schoenfeld and Robert Ginis

CHAPTER 10 Fixed-Income Benchmarks 163
Vache Mahseredjian and Mark Friebel

CHAPTER 11 Hedge Fund Benchmarks and Asset Allocation 179
Mark Anson

CHAPTER 12 Using Indexes as Analytical Tools: Viewing Changes in the World’s Stock Markets through the Benchmarks 209
Mark Sladkus

CHAPTER 13 Socially Responsible Investment and Index Benchmarks 229
Peter Wall

PART THREE The Ever-Expanding Variety and Flexibility of Index Products 245
Steven A. Schoenfeld

CHAPTER 14 The Wide World of Index Products: Building Blocks for an Efficient Portfolio 249
Steven A. Schoenfeld and Joy Yang

CHAPTER 15 Enhanced Indexing: Adding Index Alpha in a Disciplined, Risk-Controlled Manner 277
Steven A. Schoenfeld and Joy Yang

CHAPTER 16 Exchange-Traded Funds: A Flexible and Efficient Investment Tool 297
Yigal Jhirad, Omer Ozkul, and David Qian

CHAPTER 17 Indexing Real Estate 325
James S. Keagy

CHAPTER 18 Active Indexing: Sophisticated Strategies with Index Vehicles 339
Steven A. Schoenfeld, Robert Ginis, and Niklas Nordenfelt

PART FOUR Managing Index Funds: It’s Anything but Passive! 361
Steven A. Schoenfeld

CHAPTER 19 Fundamental Index Portfolio Management Techniques 365
Steven A. Schoenfeld and Kevin Maeda

CHAPTER 20 The Unique Challenges of U.S. Equity Index Management 389
Amy Schioldager, Will Hahn, Ed Hoyt, and Jane Leung

CHAPTER 21 Delivering Performance in International Equity Indexing 405
Eleanor de Freitas, Robert Ginis, Creighton Jue, Tom McCutchen, Steven A. Schoenfeld, and Amy Whitelaw

CHAPTER 22 Managing Fixed-Income Index Funds 433
Elizabeth Para and Partha Dasgupta

CHAPTER 23 Managing Exchange-Traded Funds 455
Lisa Chen and Patrick O’Connor

CHAPTER 24 Index-Based Separately Managed Accounts: Delivering on the Performance Promise 479
Mark Adams, Kevin Maeda, and Steven A. Schoenfeld

PART FIVE Pulling It All Together: How to Use Index Products to Build an Efficient, Risk-Controlled Investment Strategy 497
Steven A. Schoenfeld

CHAPTER 25 Choosing among Index Vehicles: How Does an Institutional Investor Select an Investment Product? 503
Joanne Hill and Barbara Mueller

CHAPTER 26 How and Why Large Pension Plans Use Index-Based Strategies as Their Core Investments 535
Nancy Calkins

CHAPTER 27 Tax-Efficient Indexation 559
Mark A. Zurack

CHAPTER 28 Indexing for Advisors: A Sophisticated Strategy for Professional Investment Advisors and Their Clients 569
Michael J. Chasnoff

CHAPTER 29 Indexing for Individual Investors 585
Greg Baer and Gary Gensler

CHAPTER 30 Indexing at the Core: The Four Key Axioms for Long-Term Investment Success 607
Steven A. Schoenfeld

CHAPTER 31 The Future of Indexing: The Revolution Has Just Begun! 625
Steven A. Schoenfeld

GUIDE TO THE E-PPENDIX: www.ActiveIndexInvesting.com, Partnered with IndexUniverse.com 649

ABRIDGED GLOSSARY OF INDEXATION AND QUANTITATIVE INVESTMENT TERMINOLOGY 657

ABRIDGED BIBLIOGRAPHY AND RESEARCH RESOURCES 665

INDEX 671

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