The Active Side of Indexing with Rob Arnott

Rob Arnott joins Lotta Moberg, PhD, CFA, to discuss the ideas behind The Active Side of Indexing and challenge common assumptions about passive investing. Arnott explains why traditional market‑cap indices are not as passive as they appear, highlighting how index construction and rebalancing can lead to systematically buying high and selling low. The conversation examines the impact of index inclusion and deletion, turnover dynamics, and overlooked trading costs, as well as the implications for long‑term performance. Arnott also explores momentum, mean reversion, and the growing influence of index funds on market structure, offering a fresh perspective on how investors should think about benchmarks, efficiency, and the relationship between active and passive strategies.