• Corpus ID: 157346405

The case for low-cost index-fund investing

  title={The case for low-cost index-fund investing},
  author={Garrett L. Harbron and Daren R. Roberts and Jeffery A. Johnson},
Acknowledgements: The authors thank David J. Walker, of Vanguard’s Investment Strategy Group, for his valuable contributions to this paper. This paper is a revision of Vanguard research first published in 2004 as The Case for Indexing by Nelson Wicas and Christopher B. Philips, updated in succeeding years by Mr Philips and other co-authors. The current authors acknowledge and thank Mr Philips and Francis M. Kinniry Jr for their extensive contributions and original research on this topic. 
1 Citations

Figures from this paper

Have Investors Paid a Performance Price? Examining the Behavior of ESG Equity Funds

The academic and practitioner literature provides a variety of contradicting theories as to expected consequences of environmental, social, and governance (ESG)-related factors on the risk and return



An evaluation of smart beta and other rules-based active strategies

■ Following significant losses by large-cap and growth stocks during the 2000–2002 bear market, investor interest has increased in non-market-capitalization index-weighting strategies that


W ITHIN the last few years considerable progress has been made in three closely related areas-the theory of portfolio selection,1 the theory of the pricing of capital assets under conditions of

Luck Versus Skill in the Cross Section of Mutual Fund Returns

The aggregate portfolio of actively managed U.S. equity mutual funds is close to the market portfolio, but the high costs of active management show up intact as lower returns to investors. Bootstrap

The Ins and Outs of Index Tracking

The extent to which an index fund successfully tracks its benchmark index is gauged by two metrics: excess return and tracking error. Using a cross-sectional sample of 198 U.S.-domiciled, index

The Performance of Mutual Funds in the Period 1945-1964

In this paper I derive a risk-adjusted measure of portfolio performance (now known as Jensen's Alpha) that estimates how much a manager's forecasting ability contributes to the fund's returns. The

Shopping for alpha: You get what you don't pay for

is to select specific active funds that provide the greatest likelihood of earning positive alpha. This is not a simple task. Although it’s easy to identify managers who have delivered

The Active-Passive Debate: Market Cyclicality and Leadership Volatility

■■ In this update to our original 2009 paper, we reexamine the active-versus-index debate from the perspective of market cyclicality and provide context for the changing nature of performance

The Persistence of Mutual Fund Performance

This paper analyzes how mutual fund performance relates to past performance. These tests are based on a multiple portfolio benchmark that was formed on the basis of securities characteristics. The

Debunking Some Myths of Active Management

Too often, active managers promote their services in ways that help perpetuate a number of myths and misconceptions about active management. These include the confusion of alpha with beta, skill with

Debunking some myths and misconceptions about indexing

  • Economics
  • 2014
One of the most persistent myths in the investment industry is that it makes sense to use an index strategy in efficient markets, for instance with large-capitalization stocks, but to use an active