Index funds were inspired by a simple intuition, not by CAPM theory.

Evidence

9. There is a sense in which it was the Capital Asset Pricing Model that “ought” to have inspired index funds (because it posits that the market portfolio is mean-variance efficient), but, as noted in chapter 3, in practice the inspiration tended to be the simpler intuition that “you can’t systematically beat the market.” — Donald MacKenzie, An Engine, Not a Camera, 1632

Categorization

• XREF: Extends the book’s central performativity theme: the formal model did not drive the practice directly; a cruder reading did. — connects to: Indexing practice made CAPM’s single-portfolio implication seem less egregious to economists — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 385; Index funds directly implemented financial economics’ efficient-markets claims — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 134; Expected-value-only investing logically implies holding a single stock, not a diversified portfolio — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 207

Broader Connections

• Indexing practice made CAPM’s single-portfolio implication seem less egregious to economists #expands (0.80) — Donald MacKenzie, An Engine, Not a Camera, 385
• Index funds directly implemented financial economics’ efficient-markets claims #contradicts (0.80) — Donald MacKenzie, An Engine, Not a Camera, 134
• Expected-value-only investing logically implies holding a single stock, not a diversified portfolio #corroborates (0.75) — Donald MacKenzie, An Engine, Not a Camera, 207