One last thing to consider: Low-cost index investing has been the hot trend since the financial crisis. However, change seems to be the only constant in equity markets. Some folks have argued that direct indexing is the next innovation that will disrupt the financial industry. This entails matching the performance of an index by buying the underlying shares, typically minus what the investor doesn’t like or need. This method is 100 percent transparent, taking disclosure to the next level.
Those of us who believe in the competition of ideas and market-based solutions see the merit of greater disclosure and transparency, which is one of the beneficial features of index investing. It hardly seems objectionable or controversial if the SEC wants more of it.
This column was provided by Bloomberg News.