Is it summer again, already? We always do our very best around here to provide all of you index geeks out there with some quality beach reading. I know you’re out there—those of you who, like us, eat this stuff up and eagerly look forward to every issue. Don’t be embarrassed to take it out to the beach, the lakefront pier, your veranda, wherever. You know you love wonky index talk. Just give yourself over to it.
This issue is a bit of a potluck, but some really good potluck, like grandma’s scalloped potatoes, Uncle Roger’s baked ham or Aunt Sally’s sugar-crusted oatmeal cookies at the family reunion. Almost all of the articles this issue contains come from index or index-based product providers—so we really have kept it in the family this time.
We kick off the issue with a bit of blasphemy from Steve Swartley of the Russell family (where, as a side note, there are all sorts of interesting things going on of late) telling us to go active in the micro-cap space (as, of course, many large institutional investors have done around Russell small-cap indexes for years). This article provides a nice window into the latest research on the topic.
From Philip Murphy of the S&P family is a great piece all about the latest thinking in style. While you may see it as PR for S&P’s recent alterations of their style indexes, I found it an incredibly interesting inside look at the thinking that goes into index innovation and a snapshot of where the thinking on style (historically, metrics have been all over the map) currently sits. And why not keep it rolling with the index providers? Bob Waid of Wilshire weighs in with a great little piece on what he characterizes as the 10 biggest myths in the index business. Following Bob is Mack Courter from Courter Financial Services with an intriguing—and very active (for us)—piece on moving averages and their efficacy as investment metrics.
Getting back to the indexers is David Blitzer, who has a debate with himself over whether weighting tilts can signal actionable bubbles. Hemen Bhatia of Benchmark Asset Management then reminds us that indexing doesn’t work just in the U.S. His data indicate that indexation blows active management out of the water in India. Finally, Mark Labovitz and Jeff Kenyon explain in detail why pricing an equity index is not as easy as it looks in this bit of a do-it-yourself guide to good equity index building.
Bringing us home is a summer roundtable including lively quotes from the likes of Mark Mobius, John Hyland and frequent Journal of Indexes contributor Craig Israelsen, and a raucous back-page humor piece from Lara Crigger that had me laughing out loud. Be careful not to spill your beach drink on that.
Happy summer reading!
Jim Wiandt
Editor
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