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What Intellectual Property?
 We've never been afraid of a little controversy at the Journal of Indexes. It is often a dose of controversy that helps arouse passions and open up some nice substantive discussion. It's what our adversarial system of justice is all about, and the end is supposed to be Truth.
This issue we dive into that adversarial system of justice and dish up a big helping of controversy through the detailed analysis of two attorneys, Jon Mazer and Alison Rende, who examine the turbulent world of index industry intellectual property. The analysis is smart, and it's a bombshell: With a detailed look at case law, Mazer and Rende argue that … and you may want to sit down here … the (ahem) somewhat-more-than-trivial right of index providers to charge licensing fees on products meant to track them may not exist.
Al Neubert begs to differ.
Neubert, an ex-S&P and Dow Jones insider, maintains that, if what the two attorneys say is true, you might as well be able to mix up some syrup and brown food coloring and say you're selling Coca-Cola.
On the heels of all of this controversy, I thought I'd add some of my own. I have a study in this issue comparing the relative performance of ETFs and mutual funds, and providing an analysis of the differences. And there are differences …
Next up is an extremely interesting analysis of the costs and benefits of synthetically tracking the EAFE index vs. the one-stop shopping provided by the new EAFE futures contract that is now trading on the CME.
On the currency side, we have a nice article by Professors W. Bryan Barrett and Tom Sanders on the disappearance of the drift factor in the reworked USDX Dollar Index.
The issue also includes a nice submission by Craig Israelsen—the second strong piece of research he's done for us covering the active vs. passive question. Professor Israelsen is refreshingly nonpartisan on the active vs. passive debate, and he believes that it's critical that investors examine the issue on a portfolio and not simply a fund level, since ultimately, overall portfolio performance is what counts.
As always, we include a lively column from David Blitzer, who pontificates about risk and the new index product innovations that are in the pipeline. Finally, the back page is graced by a raucous column from Matt Hougan on Rydex's S&P 500 Equal-Weight ETF, RSP, which he dubs "the idiot savant of strong performance." Indeed …
It's that time of the year again. Stay tuned for the William F. Sharpe Indexing Achievement Award winners. The results will be posted in real time on IndexUniverse.com after the Super Bowl of Indexing in Phoenix December 3-6. Happy Holidays.
Jim Wiandt
Editor
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2006
