What's being penalised is diversification itself. Punishment awaits any portfolio that doesn't look like the index, says UBS. Clever stock picking won't deliver outperformance like it once did, not just because it's hard, but because it means allocating cash away from the dominant eight.
When a $1.75+ trillion company enters the index on day 15, these passive funds are legally and mechanically obligated to buy billions of dollars of the new stock to accurately match the index weighting.
1mo ago
Underscored — save the words that stop you in your tracks.
