Can anyone explain to me why enhanced indexing has highest alpha? I thought the active stretegy has highest alpha-just by definition?
Thanks.
Before or after management fees?
does it matter?
it does. before fees - alpha is usually greater - but because active management involves the big buck guys who are making recommendations to you - you pay them fees - and after that you are left with almost nothing …
unlike in enhanced indexing where the fees are not as much to take off.
What cpk said.
makes sense. Thanks CPK and magaician.