In recent years, investors have begun moving away from traditional active management in favor of more cost-efficient indexing strategies. The result has been a tremendous surge in the popularity of ETFs and a serious threat to actively-managed mutual funds that have dominated the investment industry for decades. As market indexes have transitioned from performance benchmarks to investable baskets of securities, the underlying methodologies have, not surprisingly, been the subject of increased analysis and scrutiny. As many investors now know, the system used to select and weight individual components can have a major impact on bottom line returns. And there are a number of ETF issuers out there who think they’ve come up with superior alternatives to the methodologies used by the vast majority of investors. [click to continue…]
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