There's been discussion over the years about how to classify funds in regards to passive vs indexing vs semi-active, etc. Like the Bogleheads' wiki article on Indexing describes an "index strategy boxes" classification:
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More info in this old article from Rick Ferri: Indexing in the 21st Century.
Equity and fixed income (bond fund) style boxes give you an idea of risk versus return. The equity style box is based on market capitalization, while the fixed income style box is based on investment grade quality. These investment styles are not enough to cover all the selection criteria for index funds.
Instead of investment styles, index funds are categorized according to the way they select investments, using security selection and security weighting rules. Similar to the style boxes for risk vs. return, a 3 x 3 grid categorizes index fund strategies using selection vs. weighting.
The only thing investment style and index strategy boxes have in common is an easy to understand 3 x 3 grid, designed to help make investment decisions. They are otherwise unrelated.
More info in this old article from Rick Ferri: Indexing in the 21st Century.
Statistics: Posted by sycamore — Wed Nov 27, 2024 8:09 am — Replies 4 — Views 153