Non-market-cap indices dissed in Europe this week
Jun 18th, 2008 | Filed under: Institutional InvestingRob Arnott, the outspoken proponent of “fundamental indexation” might want monitor what’s being said in Paris this week. Arnott is the owner of the patent for “non-cap-weighted indices” (see related posting). But IPE reports that Alain Dubois, the head of Lyxor Asset Management a SocGen subsidiary, told a conference audience:
“It could create a market phenomenon, like reduction of very high market caps, and could lead to performance of these indices just because everybody invests in them…It is an interesting trend, but should be arbitraged as soon as possible.”
Piling on was Tomas Franzen, head of AP2, one Sweden’s national pension funds who apparently added:
“…it is the market-cap-indices that are flawed and not necessarily the alternatives that are, per se, intelligent.”
Arnott might not actually disagree with this assessment since he has often referred to fundamental indexation as simple common sense (see related posting). In either case, the value of his patents is probably doing just fine.
