Practical Applications of What Is an Index?

Abstract

Conventional ideas on active versus passive investing need to be revised in light of recent advances on financial technology. “Active strategies manage risk actively and passive strategies do not manage risk at all,” MIT ’s Andrew Lo says in a conversation with Institutional Investor Journals . He offers a new framework for thinking about active versus passive investing by distinguishing traditional or “static” indices from more complex or “dynamic” indices that can be actively risk managed in his article, What Is an Index? , in the Spring 2016 issue of The Journal of Portfolio Management .