Investing & risk
Comparing Index and Active Funds Requires a Common Hurdle
Compare active and index strategies using matched exposures and net results, and calculate the hypothetical gross performance needed to offset a fee difference.
Financial education
Investing & risk
Portfolio exposures, valuation assumptions and the limits of return comparisons.
Analysis & practical guides
58 articles
Investing & risk
Tracking Difference and Tracking Error Are Not Interchangeable
Distinguish a fund's average benchmark shortfall from variability around that shortfall, and use hypothetical periodic returns to expose the difference.
Investing & risk
A Benchmark Is a Reference for a Specific Question
Learn to choose benchmarks with matched exposures and conventions, and see how a hypothetical portfolio's apparent success changes with its comparator.
Investing & risk
Survivorship Bias Removes Failures from the Comparison
Understand how excluding closed or unsuccessful investments can distort a historical sample, and test a hypothetical survivor-only performance claim.
Investing & risk
A Backtest Can Be Accurate Arithmetic and Weak Evidence
Learn how hindsight, parameter selection, missing costs, and unavailable information can inflate a simulation without establishing a repeatable investment edge.
Investing & risk
Net Asset Value Measures the Pool, Not an Investor's Bargain
Calculate fund NAV from assets, liabilities, and shares, and learn why a low per-share NAV does not make one fund cheaper or more attractive than another.
Investing & risk
ETF Premiums and Discounts Add a Second Source of Price Risk
Separate underlying fund value from the price paid for ETF shares, and calculate how premium changes can affect returns even when NAV is unchanged.
Investing & risk
The Bid-Ask Spread Is a Cost of Crossing the Market
Understand bid and ask quotes, distinguish spreads from commissions, and calculate the hypothetical cost of an immediate purchase and sale.
Investing & risk
Rebalancing Restores a Risk Mix Rather Than Predicting Prices
Explore portfolio drift, calculate a hypothetical rebalance, and compare calendar and threshold rules without treating either as a return guarantee.
Investing & risk
New Contributions Can Correct Drift Without Selling
Calculate when contributions can restore an allocation, see why the amount needed can be larger than expected, and recognize when new cash is insufficient.
Investing & risk
Dollar-Cost Averaging Changes Share Counts, Not the Asset's Quality
Calculate average cost from equal-dollar purchases, distinguish it from the average quoted price, and understand why repeated buying cannot guarantee a profit.
Investing & risk
Staging an Available Sum Trades Immediate Exposure for Timing Spread
Compare full and staged investment under two invented price paths, and distinguish behavioral comfort from evidence about future market performance.