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by loganfrederick
2274 days ago
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One key to the success of index funds is that the indexes will remove underperforming companies and replace them with growing companies. The argument for this enforced survivorship bias is that it's meant to provide a dynamic view of the economy changing. In practice, this also helps keep the returns of the indexes up and is a case of survivorship bias working out in the individual passive investor's favor. https://jpm.pm-research.com/content/29/1/51 |
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