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.
