Active Index Investing: Maximizing Portfolio Performance and Minimizing Risk Through Global Index Strategies

"Here is everything you ever wanted to know about index investing. Steven Schoenfeld has put together a superb set of chapters written by leading practitioners in the investment industry. Both index and active investors will find a wealth of useful information in these pages."
Burton G. Malkiel
Professor of Economics, Princeton University
author of A Random Walk Down Wall Street

"There is a great fiction in many parts of the investment industry: that indexing is a ‘passive’ strategy. This book clearly shows why that belief is wrong. Steven Schoenfeld and the broad group of contributors he has assembled lay out a compelling case for why both the management and use of index funds are very active processes.
"Steven is a thought leader in the investment management field, and now he has provided a book that makes his knowledge available to everyone. Anyone involved with money management will want to read this book. It will become a standard reference text for years to come as more investors understand the role of indexing as part of active portfolio management."
Lee Kranefuss
CEO, Exchange Traded Funds
Barclays Global Investors

"Active Index Investing covers it all and is a must–read for theoreticians, practitioners, and students alike. Schoenfeld’s book provides a breadth of insight about benchmarks and index investing, ranging from the evolution of indexing and the theory of index construction to investment strategies and applications."
William J. Brodsky
Chairman & CEO
Chicago Board Options Exchange

"The whole discipline of indexing and benchmarking is clearly moving into the next generation of its development and is at the cutting edge of investing practices. Steven Schoenfeld has added to the insights of a virtual who’s who among indexing practitioners his own significant depth and breadth of experience to provide the definitive modern compendium of where indexing currently is and where it is going. As indexing and benchmarking should be a part of every investor’s thinking, Active Index Investing should become their must–have desk reference."
Paul R. Aaronson
Executive Managing Director, Investment Services
Standard & Poor’s

FOREWORD: THE ROLE OF INDEXING AND BENCHMARKS IN DEVELOPING SOUND INVESTMENT APPROACHES (Don Phillips).

PREFACE.

ACKNOWLEDGMENTS.

CONTRIBUTORS.

ABOUT THE EDITOR.

CHAPTER 1: Indexing IsActive: The Meaning of Active Indexingand the Interconnected Themes of the Book (Steven A. Schoenfeld).

PART ONE: The Indexing Revolution: Theory and Practice (Steven A. Schoenfeld).

CHAPTER 2: The Foundations of Indexing: Theoretical and Practical Underpinnings of a Heretical Concept (Binu George, Steven A. Schoenfeld, and Jim Wiandt).

CHAPTER 3: The Ever–Evolving Uses of Indexing: Why the Active versus Index Debate Is Over (Matthew Scanlan, Binu George, Francis Enderle, and Steven A. Schoenfeld).

CHAPTER 4: Market Uncertainty and the Role of Indexing (Adele Kohler).

PART TWO: Benchmarks: The Foundation for Indexing (Steven A. Schoenfeld).

CHAPTER 5: The Vital Importance and Fundamental Uses of Benchmarks (Pamela Cloyd, Larry Siegel, and Steven A. Schoenfeld).

CHAPTER 6: Perfection Impossible: Best Practices for Index Construction (Steven A. Schoenfeld).

CHAPTER 7: The Ideal Index Construction (Gus Sauter).

CHAPTER 8: U.S. Equity Benchmarks Broad–Cap, Size, and Style Indexes: Slicing and Dicing the U.S. Equity Market (Gardner Platt, Brad Pope, and Chad Rakvin).

CHAPTER 9: International/Global Equity Benchmarks for North American Investors (Steven A. Schoenfeld and Robert Ginis).

CHAPTER 10: Fixed–Income Benchmarks (Vache Mahseredjian and Mark Friebel).

CHAPTER 11: Hedge Fund Benchmarks and Asset Allocation (Mark Anson).

CHAPTER 12: Using Indexes as Analytical Tools: Viewing Changes in the World s Stock Markets through the Benchmarks (Mark Sladkus).

CHAPTER 13: Socially Responsible Investment and Index Benchmarks (Peter Wall).

PART THREE: The Ever–Expanding Variety and Flexibility of Index Products (Steven A. Schoenfeld).

CHAPTER 14: The Wide World of Index Products: Building Blocks for an Efficient Portfolio (Steven A. Schoenfeld and Joy Yang).

CHAPTER 15: Enhanced Indexing: Adding Index Alpha in a Disciplined, Risk–Controlled Manner (Steven A. Schoenfeld and Joy Yang).

CHAPTER 16: Exchange–Traded Funds: A Flexible and Efficient Investment Tool (Yigal Jhirad, Omer Ozkul, and David Qian).

CHAPTER 17: Indexing Real Estate (James S. Keagy).

CHAPTER 18: Active Indexing: Sophisticated Strategies with Index Vehicles (Steven A. Schoenfeld, Robert Ginis, and Niklas Nordenfelt).

PART FOUR: Managing Index Funds: It s Anything but Passive! (Steven A. Schoenfeld).

CHAPTER 19: Fundamental Index Portfolio Management Techniques (Steven A. Schoenfeld and Kevin Maeda).

CHAPTER 20: The Unique Challenges of U.S. Equity Index Management (Amy Schioldager, Will Hahn, Ed Hoyt, and Jane Leung).

CHAPTER 21: Delivering Performance in International Equity Indexing (Eleanor de Freitas, Robert Ginis, Creighton Jue, Tom McCutchen, Steven A. Schoenfeld, and Amy Whitelaw).

CHAPTER 22: Managing Fixed–Income Index Funds (Elizabeth Para and Partha Dasgupta).

CHAPTER 23: Managing Exchange–Traded Funds (Lisa Chen and Patrick O Connor).

CHAPTER 24: Index–Based Separately Managed Accounts: Delivering on the Performance Promise (Mark Adams, Kevin Maeda, and Steven A. Schoenfeld).

PART FIVE: Pulling It All Together: How to Use Index Products to Build an Efficient, Risk–Controlled Investment Strategy (Steven A. Schoenfeld).

CHAPTER 25: Choosing among Index Vehicles: How Does an Institutional Investor Select an Investment Product? (Joanne Hill and Barbara Mueller).

CHAPTER 26: How and Why Large Pension Plans Use Index–Based Strategies as Their Core Investments (Nancy Calkins).

CHAPTER 27: Tax–Efficient Indexation (Mark A. Zurack).

CHAPTER 28: Indexing for Advisors: A Sophisticated Strategy for Professional Investment Advisors and Their Clients (Michael J. Chasnoff).

CHAPTER 29: Indexing for Individual Investors (Greg Baer and Gary Gensler).

CHAPTER 30: Indexing at the Core: The Four Key Axioms for Long–Term Investment Success (Steven A. Schoenfeld).

CHAPTER 31: The Future of Indexing: The Revolution Has Just Begun! (Steven A. Schoenfeld).

GUIDE TO THE E–PPENDIX: www.ActiveIndexInvesting.com, Partnered with IndexUniverse.com.

ABRIDGED GLOSSARY OF INDEXATION AND QUANTITATIVE INVESTMENT TERMINOLOGY.

ABRIDGED BIBLIOGRAPHY AND RESEARCH RESOURCES.

INDEX.

Steven A. Schoenfeld is the Chief Investment Strategist for the Quantitative Management area of Northern Trust Global Investments (NTGI), which encompasses more than $200 billion in index and enhanced index strategies committed to the world s equity and fixed income markets. He is also a Senior Research Fellow with Duke University s Global Capital Markets Center.  He was the founder of IndexUniverse.com,  and was a Managing Partner of Global Index Strategies LLC, a specialized consulting firm.  Steven previously served as Chief Investment Officer of Active Index Advisors and as a Managing Director of Barclays Global Investors, responsible for $65 billion in global index funds and ETFs,  He developed some of the first emerging market index products while at the International Finance Corporation/World Bank, and traded Japanese stock index futures as a member of the Singapore Exchange. Steven serves on key governance committees for most major benchmark indexes.  He was a Fulbright Scholar in economics in Singapore and coauthored The Pacific Rim Futures and Options Markets.