|UNKNOWN||NORTH AMERICAN - LARGE & ETFs||Yes|
Educational Segment. Fundamental Indexing. Market Cap indexes are the traditional way to do indexes and fundamental indexing looks at cash flow, profitability, dividend sustainability and so on. It is a rules based approach that focuses on the strength of the underlying companies. Market weight is a popularity contest. E.g. Nortel. It went from 3% to 30% of the TSX index. It represents a key flaw of market weight investing. You would have ridden it all the way back down. VRX-T did something similar being 9% of the TSX 60 at its height. Returns are better in fundamental indexing rather than market cap indexing. It will not win over every part of the cycle but long term it wins. Larry’s guest runs his screen once per year. Running it more often incurs trading costs and so on. Research shows you only run it once a year. These funds have a few basis points more MER and are worth it.
Larry Berman CFA, CMT, CTA
Chief Investment Officer, Partner, ETF Capital Management Inc. http://www.etfcm.com