The State Of The Index World

April 30, 2008

Jim WiandtLeading off our early summer offering are two outstanding submissions from academia. We normally backload the magazine with our more academic offerings to give you a chance to get warmed up at the front of the publication. But this issue, we open with an outstanding ramble through the current state of the indexing world by Professor Don Chance of Louisiana State University, who is always a good read.

Next up is the closest look I've seen at the process of how and why the arbitrage process works for ETFs, from Professor John Neumann of St. John's University. If you didn't already have confidence in the tight pricing of ETFs to the underlying net asset value (NAV), this should help you find some.

The Neumann piece is a perfect lead-in to our ETF trading roundtable. These features are among my favorites that we do, and this one is stellar. We've brought in the key figures around ETF trading and asked them the same questions side by side to compare and contrast their responses. The result is extraordinarily interesting and informative.

While we're in the debating spirit, we have a submission from Bob Waid (father of the DJ Wilshire indexes) that takes a direct shot at the Russell 2000. Kelly Haughton (father of the Russell indexes) provides a rebuttal. The poor (index) kids, as always, are caught in the middle.

Also out of the middle of the index business is David Blitzer of S&P with his column, which takes a reflective look at current market turbulence and its place in history.

Our own Murray Coleman weighs in with an index-focused piece of his own … this one examining the rough-and-tumble world of the smaller, innovative index providers. Murray's piece has some choice quotes, including this one from Kevin Carter at Alpha Shares: "If you're providing an index to a $50 million [in assets] ETF, then you'd better find a night job."

Then we get into the "old school" material. John Bogle returns to his Corner with a biting look at the yawning gap between fund and shareholder returns, while Professor Haslem provides a clarion call for the banishment of 12b-1 fees.

Rounding out the issue is a nifty little profile with one of those innovative indexers Murray was talking about, Benedict Okoh from AfriFinance, which has African indexes that have been launched into incipient demand from investors increasingly looking toward frontier markets. We've got it all here this issue, from the new school to old school. We hope you enjoy it.

Jim Wiandt
Jim Wiandt


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