Profile image
By Humble Student of the Markets (Reporter)
Contributor profile | More stories
Story Views

Last Hour:
Last 24 Hours:

A passive index fund built to outperform?

Tuesday, March 28, 2017 14:23
% of readers think this story is Fact. Add your two cents.

(Before It's News)

A long time reader sent me this Seeking Alpha article entitled “Monish Pabrai Has Created An Index Fund Built To Outperform”, which described a “passive index fund” built using the following three investment themes deployed in three portfolio buckets:

  • Share buybacks: Companies that are buying back their own shares
  • Selected value manager holdings: The holdings of 22 selected value managers, based on their 13F filings
  • Spin-offs: Companies that were recently spun off from their parent

It’s difficult to have a detailed opinion on the pros and cons of this fund. That’s because the article only described what this “index fund” would hold, it did not describe the portfolio construction method, or how much of each stock it would hold. So it`s impossible to understand the risk profile of the fund, the size of its factor exposures, as well as its sector and industry exposures.

All the marketing hype aside, this investing approach is really a re-packaged form of factor investing, otherwise known as “smart beta”. Therefore investors who buy into such a vehicle should expect similar kinds of results as “smart beta”, though in a multi-factor format.

The full post can be found at our new site here.


Report abuse


Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories



Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.