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FYI: “Smart beta” is a term that has increased in popularity over the last year or so. The straightforward idea is that there are numerous problems with the way that traditional stock and bond market indices — and their tracking funds — are constructed. Regards, Ted http://investorplace.com/2015/05/invest-equal-weight-etf/print
I have not done the work (sorry) but think the equal weight outperformance is mostly due to the bias of smaller average caps outperformance . I suggest that a 50% S+P 500 50% extended market index would mostly outperform the equal weight at lower cost. I am also surprised that the equal weight Nasdaq outperformed in 2014 when aapl and msft had good years though the article doesn't exactly say it did (multi year performance could be influenced by bad year for aapl
I own two equal weight index funds. One is a large cap fund (IACLX) which invest in equal amounts in the largest 100 stocks found in the S&P 100 Index. The second is a large/mid cap fund (VADAX) that invest in equal amounts in companies found the S&P 500 Index. Both funds rebalance quarterly. In this way stocks that have done well are trimmed and those that have lagged are increased back to their target weightings.
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Old_Skeet