Why is passive not the solution?
Christophe Roehri, Deputy CEO of TOBAM presented at the SPS Conference in London on February 9, 2016: “Why is passive not the solution”
Using market cap-weighted indices as the basis for equity portfolio construction raises issues given these benchmarks’ significant bias toward past success, their vulnerability to asset price bubbles, and their concentration risk. The presentation is aiming at demonstrating the inefficiencies of market cap-weighted benchmarks, coming from insufficient diversification in the implicit strategy of passive portfolios that track market cap-weighted indices.
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