Why is the duration of bond index a "historical accident"?
What will be an ideal response?
As noted in the previous answer, there is no reason to believe that there will be any consistency between the cost minimization objective of issuers and the return maximization objective of investors in the determination of the duration in the market. As a result, Siegel refers to the duration that is obtained from an index as a "historical accident." By "accident," Siegel means that there is no active decision-making made by a portfolio manager (or client) so whatever the outcome it occurs by chance and thus in a sense is random.
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