Allan Roth: Creating Alpha Through Beta Funds

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Random Walker
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Allan Roth: Creating Alpha Through Beta Funds

Post by Random Walker » Thu Oct 11, 2018 9:09 am

https://www.etf.com/sections/index-inve ... beta-funds

Index funds generally trail their corresponding indexes by an amount equal to their fees. Some passive funds can do better than that without deviating significantly from their mandate to adhere to their benchmark. Passive funds can add value with securities lending and patient trading. In this article Allan focuses on Vanguard’s practices. Fund companies will vary in how aggressively they approach securities lending and trading strategy. Companies can vary in the use of block trading and buy/hold ranges. The expense ratio is a strong start in evaluating a passive fund, but it doesn’t tell the whole story.

Dave

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