Quote:
Originally Posted by walkinwood
There are some other threads on the topic. Search for Arnott.
Also, a lot of discussion over at bogleheads.org.
I am skeptical & can't quite see the difference between Arnott's funds & 'value' indexes. I haven't read the book, just some articles on the web.
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I read that same book last year. As I understand it, the difference is that a standard "value" index is still cap-weighted, and to the extent that cap-weighting tends to put more of a fund's assets into a (comparatively) overpriced stock and less into an underpriced stock, it would under perform an otherwise comparable fundamentally-weighted index. That's the theory anyway. But fundamental weighting has expenses that cap-weighting doesn't. Whether these extra expenses would cancel out the higher performance of the fundamentally-weighted fund and leave it essentially equivalent to a value fund, I wouldn't want to venture a guess.
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