Seides: Active management is more effective in concentrated emerging market indices
Ted Seides · Ted Seides – A Rational Reminder (Capital Allocators, EP.121) · Jan 27, 2020 · at 30:35
Ted Seides discusses why passive index investing works better in the US than in international markets with concentrated, state-dominated index compositions.
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“I think that the US market for index funds is actually quite different from most other markets around the world in that, say the S&P 500 is very diverse with a lot of global leading companies. If you were to look in, say, emerging markets, there are a lot of countries where the index is dominated by a very small number of enterprises, and they tend to be either a state-owned enterprise or a utility. They're not the sort of dynamic companies in the economies, and so just an active strategy to not be forced to own certain concentrated names makes a lot of sense in a lot of countries around the world.”
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