Index funds are known for their ultra low fees, which, don’t get me wrong, are a great attribute for an investment product, but fees are not the only cost that investors need to think about. The details of index, and, by extension, index fund rebalancing lead to hard-to-see but significant costs, far in excess of index fund fees. This fact shows cracks in the famous arithmetic of active management.
Discussion with the author of Do Index Funds Incur Adverse Selection Costs? • Do Index Funds Incur Adverse Selectio...
References: https://zbib.org/0f8f90d87ca0484d8e48...
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