Man or machine?

Shuttleworth, John
October 2002
Accountancy;Oct2002, Vol. 130 Issue 1310, p61
Trade Publication
The article focuses on the index tracking investment technique and its' advantages over investment management. Index tracking is a simple technique in which a computer allocates the investor's money, buying investments that mechanistically replicate some index such as the Financial Times and the London Stock Exchange index. Performance monitoring thus becomes easier. Moreover, the investor is free to concentrate on how much risk to take and how best to diversify risk. In this way investors will save their time that they spend on choice of investment manager. Common sense says that roughly half active managers should outperform the index and half should underperform. In practice it is worse because of their lower costs, index-trackers outperform roughly 60% of active managers. And worse still, the outperforming active managers in one period seem not to repeat in the next. Index tracking is cheap, with lower costs due to lower overheads and fewer transactions. The very biggest trackers cross their internal buyers and sellers, thus save a modest amount of commission and avoid market spread.


Related Articles

  • ALGORITMI DE OPTIMIZARE ÃŽN MANAGEMENT UTILIZÂND TEHNICI DE CLASIFICARE. Ştefănescu, Viorica; MihăiŃă, Niculae; Şerban, Florentin; Dedu, Silvia // Studii si Cercetari de Calcul Economic si Cibernetica Economica;2009, Vol. 43 Issue 3/4, p1 

    In this paper, it is presented an original method for building a portfolio which can characterize the evolution of Bucharest Stock Exchange. We will use data concerning both fundamental analysis and technical analysis of shares in order to build the portfolio. We will present the principles used...

  • MARKET COMMENTARY.  // Dow Theory Forecasts;1/20/2003, Vol. 59 Issue 3, p3 

    Recommends the percentage of cash position in equity portfolios for 2003. Outlook for various stock price indicators; Importance of corporate earnings reports for the December 2002 quarter; Investors' realization that security analysts tend to be optimistic with company forecasts.

  • The East is on the up. Abrams, Colin // Finance Week;3/29/2004, p26 

    Offers suggestions to South African traders and investors planning to diversify their portfolios in the Japanese and Australian stock exchanges. Performance of the Japanese and Australian stock exchanges; Stock price index; Relative strength index.

  • Timing the Market Revisited. Basso, Thomas F. // Financial Planning;Feb2001, Vol. 31 Issue 2, p104 

    Deals with a strategy for timing the stock market. Advantages and disadvantages of moving averages; Criticisms on market timing; Potential benefit to planners and clients.

  • WHY THE STOCK MARKET doesn't work. MONTGOMERY, ROGER // inFinance;Dec2012, Vol. 126 Issue 4, p37 

    The article offers the author's views about the reason why investors in Australia have deserted the stock market, along with the steps he is taking to ensure investor returns and investors return. He talks about the factors that drive short-term share price, the two ways to approach the stock...

  • That Stock Exchange cycle. Cobbett, David // Accountancy;Sep73, Vol. 83 Issue 961, p75 

    The article discusses the modern movement of the stock market. According to the author, the market cycle has tended to shorten due to the shortened cycle of opinion. Chronic inflation has changed the market's pattern and performance. Moreover, the rise of institutional investor has an extensive...

  • Cash target now 10% to 15%.  // Dow Theory Forecasts;8/18/2003, Vol. 59 Issue 33, p3 

    Recommends the share of cash in an investment portfolio. Trends of the stock price indexes Dow Industrials and Dow Transports; Market pullback; Value line arithmetic versus Standard & Poor's 500 index; Intermediate potential risk; Opportunities in individual stocks.

  • Holding pattern. Evans, Judith // Money Marketing;4/23/2009, p25 

    The article reports on the recovery of the Adviser Fund Index (AFI) in Great Britain in May 2009. Results of market analysis show indications of the strengthening economic status of AFI. Significant factors that contribute to the recovery of AFI include positioning the portfolios earlier into...

  • FURTHER TESTS OF THE VALIDITY OF THE INDUSTRY APPROACH TO INVESTMENT ANALYSIS. Tysseland, Milford S. // Journal of Financial & Quantitative Analysis;Mar1971, Vol. 6 Issue 2, p835 

    The article addresses the popularity of industry groupings of stocks for investment analysis and the apparent lack of historical data reporting dividend and returns information of the groupings themselves. Questions are asked regarding the validity and utility of analyzing the behavior of the...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics