Wall Street Needs More Market Indexes. Seriously.
The issue isn’t that there are now about 3.7 million market gauges, but that so few have attracted so much money.
Don’t be afraid.
Photographer: Michael Nagle/Bloomberg
People tend to fear the wrong things when it comes to indexing and exchange-traded funds. Take the recent hand-wringing over an Index Industry Association report that there are now 3.7 million market indexes, an increase of about a half a million from last year. The Twitter commentary was predictable, with observations such as “peak passive” and “smells like CDOs.”
Sanford C. Bernstein — the firm that famously compared passive investing with Marxism in a research note and then proceeded to make two indexes and launch two ETFs tracking them — was so triggered by that number they wrote a satirical story mocking the quixotic quest for the perfect index.