Indexing - Currier Blows it, Benz Gets it
It was jarring to see the usually reliable Chet Currier disparage indexing in his Friday column for Bloomberg. Some of Currier's problems: his time frame (bubble's pop through now), his mish-mash of asset classes in his comparison "peer groups," his failure to account for survivorship bias (how many "internet" and growth funds that were around in 2000 are now gone, gone, like a turkey in the corn?), and his complete disregard for fund expenses.
Fortunately, Friday also brought a column from Morningstar's Christine Benz, who is clueful on the issue: passive investors have won out over active managers over the past ten years and even more extended time frames, with Vanguard's Index 500 fund, as one example among many, landing in the top quartile of its peer group, handily beating "active management" as a category and proving the Currier-dissed "academics" as right.
Factor in expenses, and the indexers did even better, keeping more of their returns through lower costs.