Rethinking index investing for better portfolio outcomes

Traditional index investing is often viewed as a low-cost, passive way to capture market returns. But index construction involves choices about inclusion, weighting and rebalancing that shape outcomes, particularly after fees, trading costs and tax. These decisions can introduce unintended biases, concentration risks and implementation frictions.

In response, a wider range of systematic, low tracking-error strategies are emerging, offering new ways to manage risk, reduce inefficiencies and improve diversification without fully departing from index-like exposures. However, navigating this marketplace isn’t straightforward. Managers often employ different philosophies under similar-sounding names when building strategies that aim to go beyond indexing.

Hosted by Asset Allocator in partnership with Dimensional Fund Advisors, this breakfast roundtable will be chaired by David Thorpe, Contributing Editor at Asset Allocator, and take place under the Chatham House Rule. It will convene CIOs, heads of research and asset allocation specialists to explore how investors can move beyond traditional index frameworks while retaining the benefits of systematic investing.

• How do index construction and implementation decisions, including weighting,rebalancing and inclusion criteria, affect investor outcomes?
• What costs and trade-offs across turnover, liquidity and tax should investors account for when evaluating index strategies
• What role can systematic strategies play in improving portfolio outcomes?

• How should investors approach exclusions and costraints without introducing unintended inefficiencies or distortions?
• What practical index replacement options exist for investors and how might these differ amongst providers?
  

Asset Allocator is a newsletter tailored to wealth managers, fund selectors and discretionary fund managers.

The service’s proprietary fund and asset allocation databases, compiled using information provided by the UK’s leading DFMs, give readers unique insights into the issues that drive investment decisions.

Tárlach Russell

tarlach.russell@ft.com

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