Welcome to Money for the rest of us. This is a personal finance show on Money, how it works, how to invest it and how to live without worrying about it.

I'm your host, David Stein today as episode 247. It's titled

More Indexes, ETS, and Manager Skill, but less Alpha. Alpha is a word for excess return.

At least that's how we're going to use it in today's episode,

the ability of managers to outperform an index.

In the paradox, we'll see that managers are actually getting more

skillful in terms of their ability to identify mispriced securities but that isn't translating into excess return. We'll see why in this

episode. But before that, let's look at indices or indexes. Turns out you can use either word. For that's the

the first, it turns out you can use either word. That's the plural of index.

Indexes or indices.

This was

proliferating and he wanted to know about how indexes and E.T. F. was proliferating.

And he wanted to know about how index providers operate.

What's their criteria for example including a particular stock in their index?

In 2017 there was 79.2 trillion dollars of assets under management

around the world. With revenue of 275 billion dollars, this is according to the Boston Consulting Group.

That includes both passive strategies which seek to replicate an index and active strategies that seek to outperform an index.

Now here is a shocking number.

There are 3.3 million stock indexes.

3.3 million.

That's 70 times more indexes than there

are publicly traded securities or publicly traded stocks. There are 43,000 publicly

...