episode: 16

History of the Indexing Revolution

November 14, 2020

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About This Episode

In our last three shows, we covered three principles of evidence-based investing, culminating in using index-based or passively managed investment strategies to act as an engine within your diversified portfolio.

But when we talk about index-based investing, we’re often met with, “I’ve never heard of it before. Is it a new thing?”

Although you may not have heard of it, indexing isn’t a short-term fad. The indexing revolution started way back in the 1970s and completely changed the way we think about investing. There is an amazing 50-year history behind indexing and that’s what we’re sharing today.

On this episode, Ruben and Keith talk about why they believe indexing is an investment revolution, the academic theories and early institutional adopters in the 1970s, how John Bogle empowered the world, why we believe we’re at a tipping point with Canadian investors and index-based investing, what you can do right now to improve your portfolio, and so much more!

Thank you for listening!

Key Topics:

  • Why we believe indexing is an investment revolution (1:41)
  • The 1970s birth of the indexing revolution (3:20)
  • Eugene Fama’s market efficiency theory (5:23)
  • What Burton Malkiel’s research showed about the inherent problems with active investing (7:38)
  • The brave, early institutional adopters of index-based investing (8:37)
  • How John Bogle of Vanguard made index-based investing available to the public (10:06)
  • Industry pushback and bullying (11:00)
  • What makes Vanguard different (11:53)
  • How John Bogle empowered the world (12:53)
  • Why you don’t see index funds advertising as mutual funds do (14:40)
  • How the economic downturn of 2007-2008 catalyzed the sped up the indexing revolution (15:51)
  • When indexing first became available in Canada (17:11)
  • The creation of the exchange-traded fund industry (18:08)
  • Canadian participation in the indexing revolution (19:09)
  • Structural issues affecting Canadian adoption of index-based investing (20:30)
  • Why we believe we’re at a tipping point with Canadian investors and index-based investing (23:09)
  • What you can do right now to improve your portfolio (24:40)
  • And much more! 

Meet your hosts

Keith Matthews

Keith Matthews

Partner & Portfolio Manager

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Ruben Antoine

Ruben Antoine

Portfolio Manager

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Marcelo Taboada

Marcelo Taboada

Associate Portfolio Manager

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Thanks for Listening!

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