Masters in Business · Thursday, July 2, 2026
Stephen Lately shares a surprising insight from academic research: consistently reinvesting maturing proceeds to the longest rung of a bond ladder over time closely resembles the behavior of an index fund. This suggests that investors seeking index-like performance might consider either strategy.
“Well, you know, Barry, this is really interesting, actually, and it's kind of a math question. But if you look at the behavior of index funds compared to just say a very simple ladder where the investor takes the maturing proceeds and goes back out to the longest rung and reinvest. If they just do that over time, over and over and over again, that does not actually look too different than an index fund.”
“It really doesn't. And there has been academic research on this, and we can make it complicated, but the bottom line is perpetual laddering is kind of like indexing, and I think that's sort of fascinating. And so if somebody knows they want to do that, they could also look at an index fund as well. But I always thought that was a really interesting thing. If you line them up side by side.”