Indexing in the 21st Century

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Published in Barclays Global Investors’ Investment Insights series, this piece argues that the active-versus-passive debate — still heated in 2002 — misframes the real question facing institutional investors. Scanlan contends that indexing should be understood not as a defensive fallback but as a sophisticated and flexible tool that can anchor a broader investment strategy while freeing active risk budget for areas where manager skill is more likely to be rewarded.

The article traces the expansion of index strategies beyond U.S. large-cap equity into international markets, fixed income, and alternative asset classes, and discusses how institutional investors were beginning to use indexing in increasingly creative ways. It foreshadows arguments Scanlan would develop more fully in his 2004 contribution to Active Index Investing.