Index funds should be expected to underperform the index

Michael Hanke and Klaus Schredelseker

Applied Economics Letters, 2010, vol. 17, issue 10, 991-994

Abstract: A widespread belief is that index funds should earn the index return. We argue that this would lead to a serious paradox. In our model, we analyse the effects of an increasing number of investors switching from active to passive investment.

Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:17:y:2010:i:10:p:991-994

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DOI: 10.1080/17446540802599689

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