Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
FYI: Larry Swedroe’s recent critique of Graham and Dodd value investing mischaracterized DFA’s value funds as “passive.” Beyond that, he misread James Montier’s discussion of “perfect” value investors, made unfair comparisons among funds and didn’t measure risk properly. Regards, Ted http://www.advisorperspectives.com/newsletters15/Are_DFAs_Funds_Active_or_Passive.php
But also another example of poor business writing. The writer applies Justice Stewart's reasoning to passive investing - he can't define it, but he knows it when he sees it. " If this doesn’t sound like a passive strategy, it shouldn’t because it isn’t."
He asserts that following a value strategy - even a mechanical index - cannot be passive. I wonder what he thinks about the S&P 500, since that follows just the large cap segment of the market. Surely that's as active as would be following a completion index (the remaining smaller part of the market)?
He also seems to miss what DFA does - if I understand DFA correctly, their active component comes not from failing to index, but in their trading tactics to track an index. Having "made his point", he sees no need to discuss what DFA actually does.
Comments
But also another example of poor business writing. The writer applies Justice Stewart's reasoning to passive investing - he can't define it, but he knows it when he sees it. " If this doesn’t sound like a passive strategy, it shouldn’t because it isn’t."
He asserts that following a value strategy - even a mechanical index - cannot be passive. I wonder what he thinks about the S&P 500, since that follows just the large cap segment of the market. Surely that's as active as would be following a completion index (the remaining smaller part of the market)?
He also seems to miss what DFA does - if I understand DFA correctly, their active component comes not from failing to index, but in their trading tactics to track an index. Having "made his point", he sees no need to discuss what DFA actually does.