Date: Thu, 25 Aug 2005 10:16:20 CST
From: beliavsky@aol.com
Newsgroups: misc.invest.financial-plan
Subject: fundamentally weighted indices
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I think stock indices weighted by fundamental measures of company size,
such as revenues or earnings, are a good alternative to cap-weighted
indices. A story in the 8/25/2005 Wall Street Journal, page D2, says
that Research Affiliates http://www.researchaffiliates.com/ offers such
indices -- with a performance fee of 18% of the outperformance of a
cap-weighted index. There is a paper "Redefining Indexation" at the
site showing how fundamental indices have outperformed historically.

I would not pay an 18% fee for a strategy that a monkey could
implement. I think an investor with about $100K to invest could get
similar performance by buying 20 stocks on his own through a discount
broker, with weights determined from publicly available data.