Why Skillful Managers Prefer Equal-Weighted Benchmarks

Autor:	Brett H. Wander
Rok vydání:	2003
Předmět:	Market capitalization medicine Econometrics Added value Economics General Earth and Planetary Sciences Capitalization-weighted index Operations management Underweight medicine.symptom Equal opportunity Stock (geology) General Environmental Science
Zdroj:	The Journal of Wealth Management. 6:54-57
ISSN:	2374-1368 1534-7524
Popis:	The author investigates the relationship between a manager9s ability to add value and the way the relevant benchmark index is constructed. He first observes that the larger the number of securities in the index, the higher the potential for added value, as this permits bets with index stocks rather than requiring the manager to go outside the index9s universe. Secondly, he argues that equal-weighted indexes are easier to beat, as, the weight of each stock in the index being the same, the manager has an equal opportunity to over- or underweight each stock. He goes on to argue that market capitalization weighted indexes, by contrast, make it harder to overweight larger stocks and underweight smaller stocks.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::88ccfcbe6d572ecfe2bf4bce7a1ae2ea https://doi.org/10.3905/jwm.2003.320474 Zobrazit plný text záznamu