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There are ways to get more diversity within indexing itself. eg: small cap index, value index funds. It seems like the bone of contention is that indexes track
by jorblumesea 7y ago
There are ways to get more diversity within indexing itself. eg: small cap index, value index funds. It seems like the bone of contention is that indexes track the entire market based on trading volume, and that is an existential risk given cap weighting. Many now invest in total market indices, which limits the impact of large cap companies. The "cap weighting" problem is a known issue in indexing and this is why you invest in total market, small cap, mid cap indices.
- sigstoat 7y agoequal-weight (instead of cap-weighted) funds are also a thing, and perhaps relevant if you want to spread your investment across more of the market: https://www.invesco.com/portal/site/us/ria/etfs/strategies/equal-weight-investing/#tab_tab3 https://www.invesco.com/portal/site/us/ria/etfs/strategies/e...