Joel Greenblatt interview with Steve Forbes (7/5/11)

[Liberty]

That would definitely be interesting to do, but in the real world, friction costs would probably make this a lot less practical than a low-cost index.

 

For an individual yes, but for an index fund or ETF to set this up there would actually be less transaction costs than a low cost index. All they would have to do would be copy every holding/transaction in the S&P 500 (or the Russel, or the Wilshire, or any index they are tracking) except for the airline stocks. Since they omit the airline stocks there would be less stocks and therefore less ongoing friction costs once the fund is set up.

 

Even if it would add just 1% long term, it would be worth it as there is really no extra work once the index is set up.

 

I was thinking about individuals, but yes, if an index was set up, that could work.