Comments on: The Lure of Fundamentally Weighted ETFs http://www.investorgeeks.com/articles/2007/07/10/the-lure-of-fundamentally-weighted-etfs/ Learning and sharing investment knowledge. Sun, 20 Jul 2008 02:48:31 +0000 http://wordpress.org/?v=2.0.4 by: ETF Guy http://www.investorgeeks.com/articles/2007/07/10/the-lure-of-fundamentally-weighted-etfs/#comment-137025 Sat, 11 Aug 2007 03:06:39 +0000 http://www.investorgeeks.com/articles/2007/07/10/the-lure-of-fundamentally-weighted-etfs/#comment-137025 I think that using the S&P 500 to compare cap-weighted ETFs and fundamental-weighted ETFs doesn't show the full picture. The S&P includes some mega-caps that certainly do significantly skew the holdings as you described. But as soon as you step in to a mid-cap ETF that tracks the S&P 400 the skew isn't nearly as great -- the top 10 holdings represent only 7.5% of the fund. I imagine this debate will rage on for many more years! I think that using the S&P 500 to compare cap-weighted ETFs and fundamental-weighted ETFs doesn’t show the full picture. The S&P includes some mega-caps that certainly do significantly skew the holdings as you described. But as soon as you step in to a mid-cap ETF that tracks the S&P 400 the skew isn’t nearly as great — the top 10 holdings represent only 7.5% of the fund.

I imagine this debate will rage on for many more years!

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