Passive in Name Only: Delegated Management and 'Index' Investing

57 Pages Posted: 24 Sep 2018 Last revised: 18 Jul 2019

See all articles by Adriana Robertson

Adriana Robertson

University of Chicago Law School; European Corporate Governance Institute (ECGI)

Date Written: June 2019


This Article provides the first detailed empirical analysis of the landscape of U.S. stock market indices. First, I hand collect detailed information about the universe of indices used as benchmarks for U.S. mutual funds. I document substantial heterogeneity across indices and find that the overwhelming majority of the indices in my sample are used as a primary benchmark by only a single fund. I then turn to “passive” index funds and find that both these phenomena are even more extreme among the indices that these funds track. Far from being “passive,” my findings indicate that index investing is better understood as a form of delegated management, where the delegee is the index creator rather than the fund manager. Finally, I turn to ETFs and find that a substantial fraction of these funds track indices that they or their affiliates create. Even controlling for other factors, I find that these funds have, on average, higher expense ratios. My findings shed light on an overlooked part of the financial market and have substantial implications for investor protection.

Keywords: stock market index, index investing, passive investing, mutual funds, ETFs, benchmarks, securities regulation

Suggested Citation

Robertson, Adriana, Passive in Name Only: Delegated Management and 'Index' Investing (June 2019). 36 Yale Journal on Regulation 795, Available at SSRN:

Adriana Robertson (Contact Author)

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

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