The Hidden Drag From The S&P 500 That Can Reduce Your Returns
capitalization-weighted indices are famous. they give more weight to larger organizations. the s&p 500 is possibly the most prominent instance. however, researchers are suggesting that this form of index can underperform different weighting strategies. the question is why. https://www.pcmag.com/picks/the-best-business-laptops researchers at intech and the london school of economics agree with they've the answer in a 2019 paper published inside the journal of investment consulting. this builds on original studies from rob arnott and others in a 2013 paper from the journal of finance. that 2nd paper confirmed in case you weighted stocks similarly, randomly or in several other so-referred to as naive methods, you'll normally outperform a capitalization-weighted index, which include the s&p 500, over the long term. in this example the long-term is measured in many years. https://www.linkedin.com/company/world-health-organization there are numerous ways to give an explanat