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News continued from page 15
Malkiel Named CIO
Of Wealthfront
Burton Malkiel, the investmentworld
legend and author of the seminal
work on indexing “A Random
Walk Down Wall Street,” was named
chief investment officer of investment
advisor firm Wealthfront.
Wealthfront has a minimum account
size of $5,000 and manages clients’ first
$25,000 free. The firm provides its services
online using the tenets of modern
portfolio theory as the backbone of its
asset allocation plans.
As CIO, Malkiel will help Wealthfront
improve its services, including the
choice of asset classes, the way it allocates
among different classes, the
choice of securities and the methods
by which it evaluates risk and applies
those evaluations to client portfolios,
the company said in a blog it published
on its website in November 2012.
Wealthfront’s advisory fee, which
is separate from fund expense ratios,
is considerably lower than what many
advisors charge. The firm puts together
its low-cost portfolios using only ETFs.
Malkiel, who is also a Princeton
University professor emeritus of economics,
will additionally meet with
select groups of Wealthfront clients,
and offer investing insights to clients
and the public, the registered investment
advisor said.
Schapiro Leaves SEC,
Succeeded By Walter
The Securities and Exchange
Commission is under new leadership
after the year-end departure of
Chairwoman Mary Schapiro, one of the
longest-serving heads of the agency. Her
successor for a year is Elisse Walter, who
has been an SEC commissioner since
2008 and whose term as a commissioner
comes to a close at the end of 2013.
Walter previously served as an executive
charged with regulatory policy
and programs at the Financial Industry
Regulatory Authority, and also led an
in-depth review of the municipal securities
markets at the SEC, according to
her bio on Wikipedia.
Appointed by President Barack
Obama and unanimously confirmed by
the U.S. Senate, Schapiro first took the
helm of the SEC in January 2009 in the
wake of the credit crisis that sent the
U.S. economy into its worst downturn
since the Great Depression. As head
of the SEC, Schapiro has also served
on the Financial Stability Oversight
Council, the FHFA Oversight Board, the
Financial Stability Oversight Board and
the IFRS Foundation Monitoring Board.
The White House statement didn’t
mention a successor for Walter in the
late November statement it issued
on the transition.
Changes To Morningstar’s
Passive Fund Research Team
Morningstar said in early December
that it had appointed Ben
Johnson global director of passive
funds research. Johnson was already
overseeing the firm’s passive fund
research teams for Europe and Asia,
and the new role means he now also
oversees the North American team.
Johnson earned a bachelor’s
degree in economics at the University
of Wisconsin. He was hired
by Morningstar in 2006.
Paul Justice previously had responsibility
for Morningstar’s passive fund
research team in North America;
currently, he is focused on research
aimed at institutional investors.
Goltz continued from page 35
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Ranaldo, A. and R. Häberle. 2007. Wolf in sheep’s clothing: the active investment strategies behind index performance. European Financial Management 14(1): 55-81.
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Endnotes
1 Further, investors have different profiles and investment contexts (liability constraints, income risk, etc.), which makes a unique reference somewhat questionable.
2 Data taken from press releases on each provider’s website. Note that, more often than not, a press release announcing the launch of an index actually refers to a new index
series being launched, which may contain several indexes such as different indexes for geographic segments. For the purpose of our analysis, we count the number of
announcements by the index provider and hence tend to capture the launch of new index series rather than of individual indexes.
3 Information on index launches was only available on the S&P website going back to Jan. 1, 2012.
4 The largest category was institutional investment management professionals, including asset owners and third-party asset managers with a focus on institutional clients,
making up 80 percent of respondents. Eighty-one percent of respondents were from the United States and the remainder from Canada.
5 For equity indexes, see Haugen and Baker [1991]; Grinold [1992]; Amenc, Goltz and Le Sourd [2006]; Hsu [2006]; Ranaldo and Häberle [2007]; Tabner [2007]; Malevergne et
al. [2009]; Fuller et al. [2010]; Goltz and Le Sourd [2010] among others.
6 See, e.g., Kamp (2008).
7 While they are related concepts, objectivity and transparency do not necessarily go together. For example, an index can be completely transparent about data, history and
the fact that it has delegated all decision-making responsibilities, not to an objective set of rules, but to a committee; similarly, an index can have very objective, systematic
rules, but impose barriers to the access of key attributes such as data and application of methodology (e.g., an index with the goal of minimizing risk does not provide precise
descriptions of statistical methods employed).
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