Why don't more people talk about and invest in indexes built by academics and economists with decades of data behind them ?
I've been researching index investing and kept coming across a category that doesn't get much attention in retail communities: academically-designed indexes with actual investable instruments.
Some clarification upfront. Not all academic indexes are investable. Raw Fama-French research portfolios, for example, are purely theoretical constructs. But many have crossed over into real products: Vanguard's VTI and VOO track CRSP indexes, which originated at the University of Chicago Booth in 1960. Dimensional's DFIV and DFSV are live ETFs built directly on Fama-French factor theory. MSCI's factor series including momentum, quality, and multi-factor have been running real allocations for decades.
**Three things that stand out about these:**
1. **No emotional decision-making.** The methodology is entirely rules-based. Factors like size, value, and profitability are applied mechanically. No manager is making discretionary calls.
2. **The research is independent.** These weren't designed to sell a product. They came out of academic work aimed at understanding what actually drives long-term returns, tested across geographies and time periods.
3. **The data is hard to ignore.** MSCI's study covering 1975 to 2014 showed momentum factor indexes outperformed standard MSCI World by +3.1% annualized, with quality indexes outperforming by +2.7%. Over decades, that gap is significant.
Two questions I genuinely can't find good answers to:
* Why are these indexes rarely discussed in retail investing communities?
* Why aren't more people allocating to the investable versions of them?
Both feel like the same question. Is it unfamiliarity? Are they seen as too complex? Or is broad market indexing so dominant as a default that nothing else gets serious consideration even when the underlying research is solid?
Would genuinely like to hear from people who have looked into this or even more so from people who have actively chosen against it.