Once upon a time, most investors faced a binary choice between stock picking and index tracking. But then the research pointed to a third option—a systematic approach to pursuing higher expected returns through evidence-based investing.
Systematic strategies tend to offer lower cost and broader diversification than stock picking. Neither do they face the constraints of index funds.
This month, we point to the evidence and benefits of this approach, including data showing the long-term premium offered by value stocks, the folly of chasing those premiums by betting on individual sectors or countries, and the ongoing case for diversification.